This Paper shows that bank closure policies suffer from a ‘too-many-to-fail’ problem: when the number of bank failures … is large, the regulator finds it ex-post optimal to bail out some or all failed banks, whereas when the number of bank …-ante standpoint. We formalize this time-inconsistency of bank regulation. We also argue that by allowing banks to purchase failed …

Many of the world’s developed economies have introduced, or are planning to introduce, bank bail-in regimes. Both the … planned EU resolution regime and the European Stability Mechanism Treaty involve the participation of bank creditors in … bearing the costs of bank recapitalization via the bail-in process as one of the (main) mechanisms for restoring a failing …

theory of investment and dividend policy, where dividends are paid by self-interested CEOs to maintain a balance between …

Central bank policy suffers from time-inconsistency when facing a banking crisis: A bailout is optimal ex post but ex … reputation for the central bank are high, monitoring effort by the banker is important in improving returns, and when the cost of …

This paper studies the strategic interaction between a bank whose deposits are randomly withdrawn, and a lender of last … resort (LLR) that bases its decision on supervisory information on the quality of the bank’s assets. The bank is subject to a …. Moreover, when the LLR does not charge penalty rates, the bank chooses the same level of risk and a smaller liquidity buffer …