Lin, Jyh-Horng; Tsai, Jeng-Yan; Hung, Wei-Ming - In: International Review of Economics & Finance 31 (2014) C, pp. 263-274
We analyze the implication of a bailout package including a loan guarantee and a direct equity capital injection on the … need to model equity as a down-and-out call (DOC) option with a capital injection due to the bank in distress. We provide … significant for the distressed bank. We show that a loan guarantee, a capital injection, or a combination of the two tends to be …