BEGIN:VCALENDAR
VERSION:2.0
PRODID:-//Talks.cam//talks.cam.ac.uk//
X-WR-CALNAME:Talks.cam
BEGIN:VEVENT
SUMMARY:How does macroprudential regulation change bank credit supply? - K
 ashyap\, A (University of Chicago)
DTSTART:20141216T090000Z
DTEND:20141216T094500Z
UID:TALK56654@talks.cam.ac.uk
CONTACT:Mustapha Amrani
DESCRIPTION:Co-authors: Alexandros Vardoulakis (Federal Reserve Board)\, D
 imitrios Tsomocos (Oxford University) \n\nWe analyze a variant of the Diam
 ond-Dybvig (1983) model of banking in which savers can use a bank to inves
 t in a risky project operated by an entrepreneur. The savers can buy equit
 y in the bank and save via deposits. The bank chooses to invest in a safe 
 asset or to fund the entrepreneur. The bank and the entrepreneur face limi
 ted liability and there is a probability of a run which is governed by the
  banks leverage and its mix of safe and risky assets. The possibility of t
 he run reduces the incentive to lend and take risk\, while limited liabili
 ty pushes for excessive lending and risk-taking. We explore how capital re
 gulation\, liquidity regulation\,deposit insurance\, loan to value limits\
 , and dividend taxes interact to offset these frictions. We compare agents
  welfare in the decentralized equilibrium absent regulation with welfare i
 n equilibria that prevail with various regulations that are optimally chos
 en. In general\, regulation can lead to Pareto improvements but fully corr
 ecting both distortions requires more than one regulation.\n
LOCATION:Seminar Room 1\, Newton Institute
END:VEVENT
END:VCALENDAR