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Hakenes, Hendrik; Schnabel, Isabel - C.E.P.R. Discussion Papers - 2012

analyzes how compensation schemes change in reaction to anticipated bail-outs. If there is a risk-shifting problem, bail-out … becomes flatter and effort decreases. If both types of agency problems are present, a sufficiently large increase in bail-out … perceptions makes it optimal for a welfare-maximizing regulator to impose caps on bank bonuses. In contrast, raising managers …

Persistent link: https://www.econbiz.de/10011083233

Caught between Scylla and Charybdis? Regulating bank leverage when there is rent-seeking and risk-shifting

Acharya, Viral V; Mehran, Hamid; Thakor, Anjan - C.E.P.R. Discussion Papers - 2012

We consider a model in which banks face two moral hazard problems: 1) asset substitution by shareholders, which can occur when banks make socially-inefficient, risky loans; and 2) managerial under-provision of effort in loan monitoring. The privately-optimal level of bank leverage is neither too...

Persistent link: https://www.econbiz.de/10011084299

Bailouts And Moral Hazard: How Implicit Government Guarantees Affect Financial Stability

Mariathasan, Mike; Merrouche, Ouarda; Werger, Charlotte - C.E.P.R. Discussion Papers - 2014

The recent crisis has shown that banks in distress can often expect to benefit from (implicit) government guarantees. This paper analyzes a panel of 781 banks from 90 countries to test whether the expectation of individual and systemic government support induces moral hazard. It shows that banks...

Persistent link: https://www.econbiz.de/10011145454

Too Many to Fail - An Analysis of Time Inconsistency in Bank Closure Policies

Acharya, Viral V; Yorulmazer, Tanju - C.E.P.R. Discussion Papers - 2004

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 failures is small, failed banks can be acquired by the...

Persistent link: https://www.econbiz.de/10005136753

Complementing Bagehot: Illiquidity and insolvency resolution

Eijffinger, Sylvester C W; Nijskens, Rob - C.E.P.R. Discussion Papers - 2011

During the recent financial crisis, central banks have provided liquidity and governments have set up rescue programmes to restore confidence and stability, often against the LLR principle advocated by Bagehot. Using a model of a systemic bank suffering from liquidity shocks, we find that the...

Persistent link: https://www.econbiz.de/10009320403

Does the European Financial Stability Facility bail out sovereigns or banks? An event study

Horvath, Balint; Huizinga, Harry - C.E.P.R. Discussion Papers - 2011

On May 9, 2010 euro zone countries announced the creation of the European Financial Stability Facility as a response to the sovereign debt crisis. This paper investigates the impact of this announcement on bank share prices, bank CDS spreads and sovereign CDS spreads. The main private...

Persistent link: https://www.econbiz.de/10009365641

The lender of last resort: liquidity provision versus the possibility of bail-out

Eijffinger, Sylvester C W; Nijskens, Rob - C.E.P.R. Discussion Papers - 2010

authority faces a trade-off: when it imposes strict bailout conditions, investment increases but moral hazard ensues. Milder … bailout conditions reduce excessive risk taking at the expense of investment. This resembles the current situation on …

Persistent link: https://www.econbiz.de/10008468710

Why organizations fail: models and cases

Garicano, Luis; Rayo, Luis - C.E.P.R. Discussion Papers - 2015

Organizations fail due to incentive problems (agents do not want to act in the organization's interests) and bounded rationality problems (agents do not have the necessary information to do so). This survey uses recent advances in organizational economics to illuminate organizational failures...

Persistent link: https://www.econbiz.de/10011165668

No margin, no mission? A Field Experiment on Incentives for Pro-Social Tasks

Ashraf, Nava; Bandiera, Oriana; Jack, Kelsey - C.E.P.R. Discussion Papers - 2012

A substantial body of research investigates the design of incentives in firms, yet less is known about incentives in organizations that hire individuals to perform tasks with positive social spillovers. We conduct a field experiment in which agents hired by a public health organization are...

Persistent link: https://www.econbiz.de/10011083234

Team Incentives: Evidence from a Firm Level Experiment

Bandiera, Oriana; Barankay, Iwan; Rasul, Imran - C.E.P.R. Discussion Papers - 2012

Many organizations rely on teamwork, and yet field evidence on the impacts of team-based incentives remains scarce. Compared to individual incentives, team incentives can affect productivity by changing both workers’ effort and team composition. We present evidence from a field experiment...

Persistent link: https://www.econbiz.de/10011083724