Bank Capital and Misconduct Incentives - Supplementary Calculations

This file accompanies the research paper Bank Capital and Misconduct Incentives. It provides numerical calculations that (i) verify the positive slope of the h(m) function (ii) show that deposit market misconduct by the incumbent increases the challenger bank’s equilibrium loans, (iii) prove that positive and negative marginal effects of the capital requirement on deposit market misconduct incentives are possible, (iv) show that Proposition 1 is neither necessary nor sufficient for the corresponding result in the deposit market, and (v) provide supporting calculations for the graphs in Section 5.1 of the paper.

These supplementary calculations were produced in Wolfram Mathematica. This proprietary software is required to run the .nb file type.