TO BAIL OUT OR NOT TO BAIL OUT SYSTEMICALLY RELEVANT FINANCIAL INSTITUTIONS: THE INCENTIVES OF POLICY MAKERS

Journal of Governance and Regulation

Lucas Marc Fuhrer¹ 

关键词: Systemically Relevant Financial Institutions;    Financial Crisis;    Bankruptcy;    Systemic Risks;    Bailouts;    Policy Makers;   

DOI  :  10.22495/jgr_v1_i4_p7

学科分类：社会科学、人文和艺术（综合）

来源: Virtus Interpress

【 摘 要 】

The recent financial crisis has shown that many financial institutions may be systemically relevant. Their bankruptcy would cause significant costs for the overall economy. However, a clear definition of systemic risks still does not exist. Thus, the decision, whether an institution is, or is not systemically relevant is in the end made by policy makers. This paper takes a closer look at the incentives available to policy makers and their influence on the bailout decision. In the model presented here it is possible to show, that too many financial institutions get bailed out, when assuming that policy makers tend to be more risk-averse than socially optimal. The costs due to this misallocation of resources can be significant.

【 授权许可】

CC BY-NC