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Regulatory and Bailout Decisions in a Banking Union

Haufler, Andreas - 2021

We model a banking union of two countries whose banking sectors differ in their average probability of failure and externalities between the two countries arise from cross-border bank ownership. The two countries face (i) a regulatory decision of which banks are to be shut down before they can...

Persistent link: https://www.econbiz.de/10013236197

Competition and stability in banking

Vives, Xavier - 2010

competition and stability in banking. There are two basic channels through which competition may increase instability: by … incentives to take risk and raise failure probabilities. The competition-stability trade-off is characterized and the … implications of the analysis for regulation and competition policy are derived. It is found that optimal regulation may depend on …

Persistent link: https://www.econbiz.de/10010270643

The regulatory response to the financial crisis

Goodhart, Charles A. E. - 2008

There are, at least, seven aspects relating to financial regulation where the recent, and still current, financial turmoil has thrown up issues for discussion. These include: 1. The scale and scope of deposit insurance; 2. Bank insolvency regimes, also known as prompt corrective action'; 3. Money...

Persistent link: https://www.econbiz.de/10010264328

Lender of last resort and bank closure policy

Freixas, Xavier; Parigi, Bruno Maria - 2008

During the last decades a consensus has emerged that it is impossible to disentangle liquidity shocks from solvency shocks. As a consequence the classical lender of last resort rules, as defined by Thornton and Bagehot, based on lending to solvent illiquid institutions appear ill-suited to this...

Persistent link: https://www.econbiz.de/10010264351

The regulator's trade-off: Bank supervision vs. minimum capital

Buck, Florian; Schliephake, Eva - 2012

We develop a simple model of banking regulation with two policy instruments: minimum capital requirements and supervision of domestic banks. The regulator faces a trade-off: high capital requirements cause a drop in the banks'; profitability, while strict supervision reduces the scope of...

Persistent link: https://www.econbiz.de/10010288239