Financial Crisis Resolution
| dc.contributor.author | SCHROTH, Josef | |
| dc.date.accessioned | 2012-07-18T10:17:41Z | |
| dc.date.available | 2012-07-18T10:17:41Z | |
| dc.date.issued | 2012 | |
| dc.description.abstract | This paper studies a dynamic version of the Holmstrom-Tirole model of intermediated finance. I show that competitive equilibria are not constrained efficient when the economy experiences a financial crises. A pecuniary externality entails that bank back-loading of dividend payments may weaken bank incentives. Banks’ strong desire to accumulate capital over time aggravates the scarcity of informed capital during the financial crisis. I show that a constrained social planner finds it beneficial to introduce a permanent wedge between the deposit rate and the economy’s marginal rate of transformation. The wedge improves borrowers’ access to finance during a financial crisis by strengthening banks’ incentives to provide intermediation services. I propose a simple implementation of the constrained-efficient allocation that limits bank size. | en |
| dc.format.mimetype | application/pdf | |
| dc.identifier.issn | 1830-7728 | |
| dc.identifier.uri | https://hdl.handle.net/1814/22796 | |
| dc.language.iso | en | en |
| dc.neeo.contributor | SCHROTH|Josef|aut| | |
| dc.relation.ispartofseries | EUI MWP | en |
| dc.relation.ispartofseries | 2012/14 | en |
| dc.rights | info:eu-repo/semantics/openAccess | |
| dc.subject | Limited commitment | en |
| dc.subject | Constrained efficiency | en |
| dc.subject | Financial regulation | en |
| dc.subject | Financial crises | en |
| dc.subject | E20 | en |
| dc.subject | E51 | en |
| dc.subject | G10 | en |
| dc.subject | G18 | en |
| dc.title | Financial Crisis Resolution | en |
| dc.type | Working Paper | en |
| dspace.entity.type | Publication | |
| eui.subscribe.skip | true |
