2007, English, Article, Working paper edition: Too many to fail [electronic resource] : an analysis of time-inconsistency in bank closure policies / Viral Acharya and Tanju Yorulmazer. Acharya, Viral V.

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Bookmark: http://trove.nla.gov.au/version/43352276
Published
  • London : Bank of England, c2007.
Language
  • English

Edition details

Title
  • Too many to fail : an analysis of time-inconsistency in bank closure policies /​ Viral Acharya and Tanju Yorulmazer.
Author
  • Acharya, Viral V.
Other Authors
  • Yorulmazer, Tanju, 1972-
  • Bank of England
Published
  • London : Bank of England, c2007.
Medium
  • [electronic resource]
Series
Subjects
Summary
  • "While the 'too-big-to-fail' guarantee is explicitly a part of bank regulation in many countries, this paper shows that bank closure policies also suffer from an implicit 'too-many-to-fail' problem: when the number of bank failures is large, the regulator nds it ex-post optimal to bail out some or all failed banks, whereas when the number of bank failures is small, failed banks can be acquired by the surviving banks. This gives banks incentives to herd and increases the risk that many banks may fail together. The ex-post optimal regulation may thus be time-inconsistent or suboptimal from an ex-ante standpoint. In contrast to the too-big-to-fail problem which mainly affects large banks, we show that the too-many-to-fail problem affects small banks more by giving them stronger incentives to herd."--Bank of England web site.
Notes
  • Title from PDF file as viewed on Oct. 22, 2007.
  • Includes bibliographical references.
  • Also available in print.
Technical Details
  • System requirements: Adobe Acrobat Reader.
  • Mode of access: World Wide Web.
Language
  • English
Libraries Australia ID
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Libraries Australia

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