This paper conducts the first empirical assessment of theories concerning risk taking by banks, their ownership structures, and national bank regulations. We focus on conflicts between bank managers and owners over risk, and we show that bank risk taking varies positively with the comparative power of shareholders within the corporate governance structure of each bank. Moreover, we show that the relation between bank risk and capital regulations, deposit insurance policies, and restrictions on bank activities depends critically on each bank's ownership structure, such that the actual sign of the marginal effect of regulation on risk varies with ownership concentration. These findings show that the same regulation has different effects on bank risk taking depending on the bank's corporate governance structure. JEL Classifications: G21; G38; G18Keywords: Corporate governance; Bank Regulation; Financial institutions; Financial risk ________________________________________________________________________ We received very helpful comments from an anonymous referee, Stijn Claessens, Francesca

Using a comprehensive database of European firms, we study the effect of market entry regulations on the creation of new limited-liability firms, the average size of entrants, and the growth of incumbent firms. We find that costly regulations hamper the creation of new firms, especially in industries that should naturally have high entry. These regulations also force new entrants to be larger and cause incumbent firms in naturally high-entry industries to grow more slowly. Our results hold even when we correct for the availability of financing, the degree of protection of intellectual property, and labor regulations.

The paper presents a comprehensive database on systemic banking crises during 1970-2011. It proposes a methodology to date banking crises based on policy indices, and examines the robustness of this approach. The paper also presents information on the costs and policy responses associated with banking crises. The database on banking crises episodes is further complemented with dates for sovereign debt and currency crises during the same period. The paper contrasts output losses across different crises and finds that sovereign debt crises tend to be more costly than banking crises, and these in turn tend to be more costly than currency crises. The data also point to significant differences in policy responses between advanced and emerging economies. T he recent global financial crisis has given rise to the largest wave of banking crises seen since the Great Depression. Unlike previous crises over this period, the recent wave of crises has (thus far) affected mostly advanced economies. The effects of the crises are still lingering and in many cases the crisis is still ongoing. The crisis has triggered renewed interest in the causes and effects of banking crises, and the optimal policy response to such crises.

Abstract:We provide empirical evidence that campaign contributions are strongly associated with market expectations of future firm-specific political favors, including preferential access to external finance. Using a novel dataset, we find that Brazilian firms providing more contributions in the 1998 campaign to (elected) federal deputies experienced higher stock returns following the election, even after controlling for industry-specific effects and firm-specific characteristics. This suggests that federal deputies were expected to shape policy and actions to benefit particular firms. Consistent with such political favors, we find that these firms substantially increased their financial leverage relative to a control group in the four years following election, especially from banks, suggesting that contributions gained firms preferential access to finance. JEL Classifications: D7, G1, G2, G3, and P48.