Author/Editor: Thierry Tressel, Thierry Verdier.

Release Date:May, 2014

We consider a moral hazard economy in banks and production to study how incentives for risk taking are affected by the quality of supervision. We show that low interest rates may generate excessive more...

Author/Editor: Thierry Tressel, Thierry Verdier.

Release Date:March, 2007

We model an economy in which domestic banks and firms face incentive constraints, as in Holmstrom and Tirole (1997). Firms borrow from banks and uninformed investors, and can collude with banks to more...