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Bail-ins and Bail-outs : Incentives, Connectivity, and Systemic Stability

Bernard, Benjamin - 2017

This paper develops a framework to analyze the consequences of alternative designs for interbank networks, in which a failure of one bank may lead to others. Earlier work had suggested that, provided shocks were not too large (or too correlated), denser networks were preferred to more sparsely...

Persistent link: https://www.econbiz.de/10012453964

A Pyrrhic Victory? - Bank Bailouts and Sovereign Credit Risk

Acharya, Viral V. - 2011

We show that financial sector bailouts and sovereign credit risk are intimately linked. A bailout benefits the economy …-financial sector to fund the bailout may be inefficient since it weakens its incentive to invest, decreasing growth. Instead, the … sovereign may choose to fund the bailout by diluting existing government bondholders, resulting in a deterioration of the …

Persistent link: https://www.econbiz.de/10012461522

Fiscal and Financial Crises

Bordo, Michael D. - 2016

Interconnections between banking crises and fiscal crises have a long history. We document the long-run evolution from classic banking panics towards modern banking crises where financial guarantees are associated with crisis resolution. Recent crises feature a feedback loop between bank...

Persistent link: https://www.econbiz.de/10012456615

Efficient Bailouts?

Bianchi, Javier - 2012

We develop a quantitative equilibrium model of financial crises to assess the interaction between ex-post interventions in credit markets and the buildup of risk ex ante. During a systemic crisis, bailouts relax balance sheet constraints and mitigate the severity of the recession. Ex ante, the...

Persistent link: https://www.econbiz.de/10012460074

Debt Fragility and Bailouts

Cooper, Russell - 2012

This paper studies debt fragility and the sharing of the resulting strategic uncertainty through ex post bailouts. Default arises in equilibrium because of both fundamental shocks and beliefs. The probability of default depends on borrowing rates and, in equilibrium, on the beliefs of lenders...

Persistent link: https://www.econbiz.de/10012460282

Balance SHeet Effects, Bailout Guarantees and Financial Crises

Schneider, Martin - 2000

international credit markets: bailout guarantees and the imperfect enforceability of contracts. The interaction of these distortions …

Persistent link: https://www.econbiz.de/10012470672

U.S. Banks, Crises, and Bailouts : From Mexico to LTCM

Stulz, Rene M. - 2000

This paper investigates the impact on bank stock prices of emerging market currency crises and bailouts. The stock market distinguishes between banks with exposure to a crisis country and other banks. In general, banks with exposures to a crisis country are affected adversely by currency events...

Persistent link: https://www.econbiz.de/10012471245

Uncertainty as Commitment

Nosal, Jaromir - 2013

Time-inconsistency of no-bailout policies can create incentives for banks to take excessive risks and generate …

Persistent link: https://www.econbiz.de/10012459895

Optimal taxation in the presence of bailouts

Panageas, Stavros - 2009

The termination of a representative financial firm due to excessive leverage may lead to substantial bankruptcy costs. A government in the tradition of Ramsey (1927) may be inclined to provide transfers to the firm so as to prevent its liquidation and the associated deadweight costs. It is shown...

Persistent link: https://www.econbiz.de/10012463244

Maturity Risks and Bank Runs

Arfaoui, Jihene; Uhlig, Harald - National Bureau of Economic Research - 2025

Inspired by the Silicon Valley Bank run and building on Diamond- Dybvig (1993), we develop a model in which asset price fluctuations can trigger bank runs. Liquidation amounts to selling assets at their market price. Depositors can buy and hold the assets after paying an idiosyncratic cost. We...

Persistent link: https://www.econbiz.de/10015421906