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This paper examines an episode when policy response to a financial crisis effectively incentivized financial institutions to reallocate their portfolios toward safe assets. Following a shift to a regime of enhanced regulation and scaled-down public assistance during the Savings and Loans (S&L)...
Persistent link: https://www.econbiz.de/10012858621
During banking crises, regulators must decide between bailouts or liquidations,neither of which are publicly popular. A comprehensive assessment of regulators,however, requires examining all their decisions against regulators’ objectives of preserving financial stability while discouraging...
Persistent link: https://www.econbiz.de/10013289554
Persistent link: https://www.econbiz.de/10012694648
How can the public assess the performance of regulators who administer the resolution of troubled banks? Economic theory indicates that regulators best serve the public interest when they act to discourage moral hazard and preserve channels of financial intermediation. I study the resolution of...
Persistent link: https://www.econbiz.de/10012912563