Government Guarantees, Transparency, and Bank Risk-Taking

Cordella, Tito ; Dell'Ariccia, Giovanni ; Marquez, Robert

World Bank, Washington, DC

关键词: banking;    risk;    transparency;    government guarantees;    bailouts;   

DOI  :  10.1596/1813-9450-7971
RP-ID  :  WPS7971

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper presents a model of bank risktaking and government guarantees. Levered banks takeexcessive risk, as their actions are not fully priced at themargin by debt holders. The impact of government guaranteeson bank risk taking depends critically on the portion ofbank investors that can observe bank behavior and henceprice debt at the margin. Greater guarantees increase risktaking (moral hazard) when informed investors hold asufficiently large fraction of liabilities. Otherwise,greater guarantees reduce risk taking by increasing theprofits of the bank (franchise value effect). The resultsextend to the case in which information disclosure, and thusthe portion of informed investors, is endogenous but costly.The model also shows that when bank capital is endogenous,public guarantees lead unequivocally to an increase in bankleverage and an associated increase in risk taking. Theanalysis points to a complex relationship between prudentialpolicy and the institutional framework governing bankresolution and bailouts.