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Did Connected Hedge Funds Benefit From Bank Bailouts During the Financial Crisis?

Faff, Robert W. - 2019

We examine whether connected hedge funds (i.e. those that are prime-brokerage clients of bailout banks) benefited from … bailout programs initiated in seven countries during the 2007–2009 financial crisis. We find that being connected to a bailout … smaller during the post bailout period, for example, due to the greater risk-taking and higher leverage of such funds …

Persistent link: https://www.econbiz.de/10012906178

The (Un)Desired Effects of Government Bailouts : The Impact of TARP on the Interbank Market and Bank Risk-Taking

Behr, Patrick - 2019

We analyze how the inflow of liquidity through TARP funds in the wake of the 2007/2008 financial crisis impacted banks' interbank market activity. We show that TARP banks increased interbank market activity statistically and economically in a very significant way. Their interbank lending...

Persistent link: https://www.econbiz.de/10012899090

CEO careers after bank bailouts

Bunkanwanicha, Pramuan - 2020

This paper examines the impact of government bailouts on bank CEOs' careers. Exploiting the Troubled Asset Relief Program (TARP) of 2008, we find that CEOs of banks that received TARP funds temporarily remained in their positions in the years 2008-2010. However, after this period, they were more...

Persistent link: https://www.econbiz.de/10012852361

Bank Bailouts and Competitive Distortions

Cardillo, Giovanni; Fiordelisi, Franco; Ricci, Ornella - 2023

Past papers show that public bailouts increase the moral hazard of rescued banks. What happens to other banks in the banking sector? Using a hand-collected dataset of European banks from 2007 to 2017 and adopting a dynamic difference-in-differences approach, we document that public bailouts...

Persistent link: https://www.econbiz.de/10014362236

The Effect of TARP on Bank Risk-Taking

Black, Lamont - 2012

One of the largest responses of the U.S. government to the recent financial crisis was the Troubled Asset Relief Program (TARP). TARP was originally intended to stabilize the financial sector through the increased capitalization of banks. However, recipients of TARP funds were then encouraged to...

Persistent link: https://www.econbiz.de/10013108932

What Do We Know about the Impact of Government Interventions in the Banking Sector? The Assessment of Various Bailout Programs on Bank Behavior

Hryckiewicz, Aneta - 2013

mute on what the optimal bailout program should look like to mitigate the negative consequence of government intervention … the risk effect the most. The optimal bailout package should include mechanisms aimed at strengthening market monitoring …

Persistent link: https://www.econbiz.de/10013084427

Uncertainty as Commitment

Nosal, Jaromir B. - 2013

Time-inconsistency of no-bailout policies can create incentives for banks to take excessive risks and generate …

Persistent link: https://www.econbiz.de/10013085550

Common (Stock) Sense About Risk-Shifting and Bank Bailouts

Wilson, Linus - 2010

If a bank is facing insolvency, it will be tempted to reject good loans and accept bad loans so as to shift risk onto its creditors. We analyze the effectiveness of buying up toxic mortgages in troubled banks, buying preferred stock, and buying common stock. If bailing out banks deemed “too...

Persistent link: https://www.econbiz.de/10013142103

When Good Investments Go Bad : The Contraction in Community Bank Lending After the 2008 GSE Takeover

Rice, Tara - 2014

In September 2008, the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac were placed into conservatorship and dividend payments on common and preferred shares were suspended. As a result, share prices fell to nearly zero and many banks across the country lost the value of their...

Persistent link: https://www.econbiz.de/10013057066

Bail-in and Bank Funding Costs

Cerasi, Vittoria; Paola, Galfrascoli - 2021

We empirically evaluate the impact of the new resolution policy, the so-called Bank Recovery and Resolution Directive (BRRD) enacted in 2016, on the cost of funding for EU banks. We first measure the change in the spreads of credit default swaps on subordinated and senior bonds issued by EU...

Persistent link: https://www.econbiz.de/10013219592