Due to its special significance in corporate financing, the banking sector is subject to extensive regulation: On one hand, banks must participate in a deposit insurance system, and on the other hand, interventions occur through minimum capital requirements. This raises the question of the relationship between capital requirements for banks and the investment behavior of bank-financed companies. Achim Hauck demonstrates, using the relationship-lending approach, that bank borrowers are particularly prone to misincentives when macroeconomically desired investment projects are associated with relatively high intermediary-specific risks, for which a high equity capital base is required. Companies often resort to other, less efficient investments with lower bank refinancing through equity, which are viewed as more favorable from the company's perspective.