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Bank Closure Policies and Capital Requirements: a Note

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  • E. Agliardi

Abstract

A bank closure policy problem is analysed in a mathematical model within a Black-Scholes framework where an appropriate notion of capital adequacy is introduced. The value of the deposit insurance liabilities and bank equity are derived. The effects of capital requirements on risk-shifting and bank reorganization are discussed, with a comparison of the impact of the Basel I and II Accords on banks behaviour.

Suggested Citation

  • E. Agliardi, 2007. "Bank Closure Policies and Capital Requirements: a Note," Working Papers 603, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:603
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