cad a22 4500 31708609X 20181103043305.0 cr unu---uuuuu 140624e20140101xx s 000 0 eng 10.5167/uzh-96663 doi 10.5430/afr.v3n1p85 doi (ZORA)oai:www.zora.uzh.ch:96663 330 ddc Barone-Adesi Giovanni Capital levels and risk-taking propensity in financial institutions [Elektronische Daten] [Giovanni Barone-Adesi, Walter Farkas, Pablo Koch-Medina] openAccess eu-repo Regulators dedicate much attention to a financial institution's option to default, i.e. the option that distressed financial institutions have to transfer losses to their creditors. It is generally recognized that the existence of this option provides intermediaries with a powerful incentive to keep firm capital close to the minimal requirement. We argue, however, that undercapitalization harms profitable growth opportunities, i.e. the institution's franchise value. Indeed, the capitalization of a financial institution will be ultimately driven by the net impact of capital levels on the default option and the franchise value. By considering the impact of the default option, our work complements and extends, within a simple Black-Scholes framework, the model used by Froot and Stein (1998) in the context of banks and by Froot (2007) in the context of insurance. Department of Banking and Finance zora Farkas Walter joint author Koch-Medina Pablo joint author Accounting and Finance Research 3(1):85-89 https://www.zora.uzh.ch/id/eprint/96663/1/Barone-Adesi_et_al_Capital_Levels.pdf text/html WWW-Backlink auf das Repository Onlinezugriff via WWW text/html http://www.sciedu.ca/journal/index.php/afr/article/view/4231/2423 ZORA 1 Journal Article PeerReviewed zora ZORA 856 40 https://www.zora.uzh.ch/id/eprint/96663/1/Barone-Adesi_et_al_Capital_Levels.pdf text/html WWW-Backlink auf das Repository ZORA 856 42 Onlinezugriff via WWW text/html http://www.sciedu.ca/journal/index.php/afr/article/view/4231/2423 ZORA 100 1- Barone-Adesi Giovanni ZORA 700 1- Farkas Walter joint author ZORA 700 1- Koch-Medina Pablo joint author ZORA 773 0- Accounting and Finance Research 3(1):85-89 SWISSBIB 17521459X BK010053 XK010053 XK010000 ZORA ZORA ZORA Journal Article openAccess