... agency theory into two parts according to the type of contractual relationship examined – the economic theory of agency and the financial theory of agency The economic theory of agency examines the ... approach overcomes both of these problems The value of the bank capital is: where Ct is the current market value of the bank capital, At is the stochastic current value of the bank assets, which ... is the expected instantaneous rate of return of the bank assets, σt is the standard deviation of the instantaneous rate of return of the bank assets, z is a standard Wiener process, Bt is the...