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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 …-ante standpoint. We formalize this time-inconsistency of bank regulation. We also argue that by allowing banks to purchase failed …
Persistent link: https://www.econbiz.de/10005136753
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Capital Requirements, Market Power and Risk-Taking in Banking
Repullo, Rafael - C.E.P.R. Discussion Papers - 2003
This Paper presents a dynamic model of imperfect competition in banking where banks can invest in a prudent or a gambling asset. We show that if intermediation margins are small, the banks’ franchise values will be small, and in the absence of regulation only a gambling equilibrium will exist....
Persistent link: https://www.econbiz.de/10005067507
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A Critical Evaluation of Bail-in as a Bank Recapitalisation Mechanism
Avgouleas, Emilios; Goodhart, Charles A - C.E.P.R. Discussion Papers - 2014
Many of the world’s developed economies have introduced, or are planning to introduce, bank bail-in regimes. Both the … planned EU resolution regime and the European Stability Mechanism Treaty involve the participation of bank creditors in … bearing the costs of bank recapitalization via the bail-in process as one of the (main) mechanisms for restoring a failing …
Persistent link: https://www.econbiz.de/10011083962
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Efficient Recapitalization
Philippon, Thomas; Schnabl, Philipp - C.E.P.R. Discussion Papers - 2009
We analyze public interventions to alleviate debt overhang among private firms when the government has limited information and limited resources. We compare the efficiency of buying equity, purchasing existing assets, and providing debt guarantees. With symmetric information, all the...
Persistent link: https://www.econbiz.de/10008577813
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The Internal Governance of Firms
Acharya, Viral V; Myers, Stewart C; Rajan, Raghuram G - C.E.P.R. Discussion Papers - 2009
theory of investment and dividend policy, where dividends are paid by self-interested CEOs to maintain a balance between …
Persistent link: https://www.econbiz.de/10004980207
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Sovereign Debt and Structural Reforms
Müller, Andreas; Storesletten, Kjetil; Zilibotti, Fabrizio - C.E.P.R. Discussion Papers - 2015
Motivated the European debt crisis, we construct a tractable theory of sovereign debt and structural reforms under …
Persistent link: https://www.econbiz.de/10011276380
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Optimal Incentive Contracts under Moral Hazard When the Agent is Free to Leave
Englmaier, Florian; Muehlheusser, Gerd; Roider, Andreas - C.E.P.R. Discussion Papers - 2010
We characterize optimal incentive contracts in a moral hazard framework extended in two directions. First, after effort provision, the agent is free to leave and pursue some ex-post outside option. Second, the value of this outside option is increasing in effort, and hence endogenous. Optimal...
Persistent link: https://www.econbiz.de/10008554231
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Moral Hazard and Efficiency in General Equilibrium with Anonymous Trading
Acemoglu, Daron; Simsek, Alp - C.E.P.R. Discussion Papers - 2010
A 'folk theorem' originating, among others, in the work of Stiglitz maintains that competitive equilibria are always or 'generically' inefficient (unless contracts directly specify consumption levels as in Prescott and Townsend, thus bypassing trading in anonymous markets). This paper critically...
Persistent link: https://www.econbiz.de/10008468520
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Rotten Kids with Bad Intentions
Netzer, Nick; Schmutzler, Armin - C.E.P.R. Discussion Papers - 2010
We examine a "Rotten Kid" model (Becker 1974) where a player with social preferences interacts with an egoistic player. We assume that social preferences are intention-based rather than outcome-based. In a very general multi-stage setting we show that any equilibrium must involve mutually unkind...
Persistent link: https://www.econbiz.de/10008468559
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Social Insurance, Education, and Work Ethics
Gradstein, Mark - C.E.P.R. Discussion Papers - 2010
This research shows that moral hazard associated with extant social insurance arrangements causes underinvestment in human capital, because of government’s inability to commit to welfare policies. It then argues that education policies, such as education subsidies or direct public investment...
Persistent link: https://www.econbiz.de/10008468672