Front Matter Page
Monetary and Capital Markets
Contents
I. Introduction
II. Literature review
III. Model
A. Investment decision
B. Comparative statics
C. Bonus capping
IV. Regional model
A. Representative regional bank
B. Labor market equilibrium
C. Regulation with a restriction on the labor mobility of bankers
D. Regulation without any restriction on the labor mobility of bankers
V. Calibration
A. Data
B. Estimation
C. Estimated parameters
VI. Counterfactual analysis
A. Main results
B. Is a bonus cap useful in times of financial crisis?
VII. Discussion
References
Tables
1. Summary of the empirical literature
2. Fixed salary by region
3. Asset exposure by vis–a–vis region
4. Mean ROA and coefficient of variation by region
5. List of parameters
6. Estimated parameters (first step)
7. Estimated parameters (second step)
8. Fitness of our model
Figures
1. Risk shifting under the existing system
2. Underinvestment under the existing system
3. Regulatory impact on risk shifting
4. Regulatory impact on underinvestment
5. Regulatory impact on risk shifting in 2008
6. Robustness to the return on safe assets (risk shifting)
7. Robustness to the return on safe assets (underinvestment)