Bank Insolvencies, Regulatory Forbearance and Ambiguity

Banking regulators often practice forbearance and ambiguity in insolvency resolutions. The paper examines the effects of regulatory forbearance and ambiguity in a context of allocational efficiency. Bailouts, liquidations and their stochastic policy mix lead to suboptimal allocations if banks do not internalize insolvency costs. The policy of forbearance may make banks internalizing such costs and improves the efficiency of intermediation.

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Year of publication:	2006
Authors:	Vinogradov, Dmitri V.
Publisher:	Heidelberg : University of Heidelberg, Department of Economics
Subject:	Bankenregulierung \| Bankinsolvenz \| Wirkungsanalyse \| Allokationseffizienz \| Theorie \| Banks \| insolvency resolution \| forbearance \| constructive ambiguity

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Series:	Discussion Paper Series ; 431
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	521019907 [GVK] hdl:10419/127252 [Handle] RePEc:awi:wpaper:0431 [RePEc]
Classification:	D50 - General Equilibrium and Disequilibrium. General ; E44 - Financial Markets and the Macroeconomy ; G21 - Banks; Other Depository Institutions; Mortgages ; G28 - Government Policy and Regulation
Source:	EconStor

Persistent link: https://www.econbiz.de/10011422144