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Contingent contracts in banking : insurance or risk magnification?

Gersbach, Hans - 2018 - This version: November 2018

We examine whether the economy can be insured against banking crises with deposit and loan contracts contingent on macroeconomic shocks. We study banking competition and show that the private sector insures the banking system through such contracts, and banking crises are avoided, provided that...

Persistent link: https://www.econbiz.de/10011932411

On the economics of crisis contracts

Aptus, Elias; Britz, Volker; Gersbach, Hans - 2014

We examine the impact of so-called "Crisis Contracts" on bank managers' risktaking incentives and on the probability of … banking crises. Under a Crisis Contract, managers are required to contribute a pre-specified share of their past earnings to … occurs and that leads to a form of collective liability for bank managers. We develop a game-theoretic model of a banking …

Persistent link: https://www.econbiz.de/10010337016

Enough liquidity with enough capital - and vice versa?

Gersbach, Hans; Haller, Hans; Zelzner, Sebastian - 2023

We study the interplay of capital and liquidity regulation in a general equilibrium setting by focusing on future funding risks. The model consists of a banking sector with long-term illiquid investment opportunities that need to be financed by short-term debt and by issuing equity. Reliance on...

Persistent link: https://www.econbiz.de/10014366762

Why bank money creation?

Gersbach, Hans; Zelzner, Sebastian - 2022 - This version: April 20, 2022

We provide a rationale for bank money creation in our current monetary system by investigating its merits over a system with banks as intermediaries of loanable funds. The latter system could result when CBDCs are introduced. In the loanable funds system, households limit banks' leverage ratios...

Persistent link: https://www.econbiz.de/10013187924