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Regulatory and Bailout Decisions in a Banking Union
Haufler, Andreas - 2021
which banks are to be shut down before they can go bankrupt, and (ii) a loss allocation – or bailout – decision of who pays … contrast, bailout policies are centralized only when international spillovers from cross-border bank ownership are strong, and …
Persistent link: https://www.econbiz.de/10013236197
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Embedded Supervision : How to Build Regulation into Decentralised Finance
Auer, Raphael - 2022
The emergence of so-called “decentralised finance” (DeFi) and a shadow financial system of cryptocurrency exchanges and stablecoin issuers raises the challenge of how to apply technology-neutral regulation so that similar risks are subject to the same rules. This paper makes the case for...
Persistent link: https://www.econbiz.de/10013405970
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Bank bailouts, international linkages and cooperation
Niepmann, Friederike; Schmidt-Eisenlohr, Tim - 2011
Financial institutions are increasingly linked internationally. As a result, financial crisis and government intervention have stronger effects beyond borders. We provide a model of international contagion allowing for bank bailouts. While a social planner trades off tax distortions, liquidation...
Persistent link: https://www.econbiz.de/10010274723
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Integrating with their feet: cross-border lending at the German-Austrian border
Fidrmuc, Jarko; Hainz, Christa - 2008
The financial integration in Europe concentrates on cross-border mergers rather than cross-border lending and emphasizes the need for harmonizing bank regulation and supervision. We study the impact of cross-border lending in a theoretical model where banks acquire either hard or soft...
Persistent link: https://www.econbiz.de/10010264346
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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
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The Political Economy of Too-Big-To-Fail
Amegashie, J. Atsu - 2019
government bailout because, in addition to meeting a threshold asset size, the firm must engage in a lobbying contest in order to … bailout and the firm's political advantage of being "too big to fail" determines the firm's probability of getting a bailout …-2010 financial crisis, I find that a smaller firm may receive a bailout while a bigger firm will not, although both firms meet the …
Persistent link: https://www.econbiz.de/10012892181
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Softening the Blow : U.S. State-Level Banking Deregulation and Sectoral Reallocation after the China Trade Shock
Ruslanova, Lilia; Hoffmann, Mathias - 2021
U.S. state-level banking deregulation during the 1980’s mitigated the impact of the China trade shock (CTS) on local economies (states and commuting zones) a decade later, in the 1990s. Local economies, where local banking markets opened up earlier, were also effectively financially more...
Persistent link: https://www.econbiz.de/10013243243
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Bank Regulation and Sovereign Risk : A Paradox
Afonso, António; Teixeira, André - 2023
This paper investigates the impact of banking prudential regulation on sovereign risk. We show that prudential regulation reduces sovereign risk and induces governments to spend more. As a result, countries with tight prudential regulation have lower primary budget balances and accumulate more...
Persistent link: https://www.econbiz.de/10014356478
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Monetary policy in a channel system
Berentsen, Aleksander; Monnet, Cyril - 2007
Channel systems for conducting monetary policy are becoming increasingly popular. Despite their popularity, the consequences of implementing policy with a channel system are not well understood. We develop a general equilibrium framework of a channel system and investigate the optimal policy. A...
Persistent link: https://www.econbiz.de/10010264077
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Liquidity shortages and monetary policy
Cao, Jin; Illing, Gerhard - 2008
The paper models the interaction between risk taking in the financial sector and central bank policy for the case of pure illiquidity risk. It is shown that, when bad states are highly unlikely, public provision of liquidity may improve the allocation, even though it encourages more risk taking...
Persistent link: https://www.econbiz.de/10010264298