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Liquidity Risk, Liquidity Creation and Financial Fragility : A Theory of Banking

Diamond, Douglas W. - 1999

Both investors and borrowers are concerned about liquidity. Investors desire liquidity because they are uncertain about … when they will want to eliminate their holding of a financial asset. Borrowers are concerned about liquidity because they … compensation for the illiquidity investors will be subject to. We argue that banks can resolve these liquidity problems that arise …

Persistent link: https://www.econbiz.de/10012471328

Liquidity Crises in Emerging Markets : Theory and Policy

Chang, Roberto - 1999

We build a model of financial sector illiquidity in an open economy. Illiquidity defined as a situation in which a country's consolidated financial system has potential short-term obligations in foreign currency that exceed the amount of foreign currency it can have access to on short notice can...

Persistent link: https://www.econbiz.de/10012471518

Evidence of Improved Monitoring and Insolvency Resolution after FDICIA

Kane, Edward J. - 2008

Giving the FDIC authority to wind up troubled banks before their tangible net worth is exhausted has reduced the role of government in the insolvency-resolution process. Consistent with an hypothesis that FDICIA has improved incentives, our data show that a markedly larger percentage of troubled...

Persistent link: https://www.econbiz.de/10012464072

Zombie Lending and Depressed Restructuring in Japan

Caballero, Ricardo J. - 2006

In this paper, we propose a bank-based explanation for the decade-long Japanese slowdown following the asset price collapse in the early 1990s. We start with the well-known observation that most large Japanese banks were only able to comply with capital standards because regulators were lax in...

Persistent link: https://www.econbiz.de/10012466526

Causes of the Korean Financial Crisis : Lessons for Policy

Hahm, Joon-Ho - 2000

This paper uses an asymmetric information framework to understand the causes of the recent financial crisis in Korea. It shows that the Korean data is consistent with this explanation of the crisis. It then draws on this analysis to discuss several lessons that can help guide Korean policymakers...

Persistent link: https://www.econbiz.de/10012471293

Financial Safety Nets : Reconstructing and Modeling a Policymaking Metaphor

Kane, Edward J. - 2001

This paper explains that financial safety nets exist because of difficulties in enforcing contracts and shows that elements of deposit-insurance schemes differ substantially across countries. It argues that differences in the design of financial safety nets correlate significantly with...

Persistent link: https://www.econbiz.de/10012470500

Prudential Supervision : Why Is It Important and What are the Issues?

Mishkin, Frederic S. - 2000

This paper outlines what problems asymmetric information creates for the financial system and shows and shows that the presence of asymmetric information explains why banks are so important. The paper then goes on to explain why prudential supervision of these institutions is needed, and what...

Persistent link: https://www.econbiz.de/10012470811

Can Emerging Market Bank Regulators Establish Credible Discipline? The Case of Argentina, 1992-1999

Calomiris, Charles W. - 2000

In the early 1990s, after decades of high inflation and financial repression, Argentina embarked on a course of macroeconomic and bank regulatory reform. Bank regulatory policy promoted privatization, financial liberalization, and free entry, limited safety net support, and established a novel...

Persistent link: https://www.econbiz.de/10012471046

Did U.S. Bank Supervisors Get Tougher During the Credit Crunch? Did They Get Easier During the Banking Boom? Did It Matter to Bank Lending?

Berger, Allen N. - 2000

We test three hypotheses regarding changes in supervisory toughness' and their effects on bank lending. The data provide modest support for all three hypotheses that there was an increase in toughness during the credit crunch period (1989-1992), that there was a decline in toughness during the...

Persistent link: https://www.econbiz.de/10012471072

Dimensions of Credit Risk and Their Relationship to Economic Capital Requirements

Carey, Mark - 2000

Now in prospect is a major revision of international bank capital regulations that would embody recent advances in credit risk measurement and management. Previous regulations have been simpler in structure, with a primary goal of getting capital requirements right on average, and thus have...

Persistent link: https://www.econbiz.de/10012471142

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