Bank Resolution and the Structure of Global Banks

Patrick Bolton and Martin Oehmke

No 24737, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the resolution of global banks by national regulators. Single-point-of-entry (SPOE) resolution, where loss-absorbing capital is shared across jurisdictions, is efficient but may not be implementable. First, when expected transfers across jurisdictions are too asymmetric, national regulators fail to set up SPOE resolution ex ante. Second, when required ex-post transfers are too large, national regulators ring-fence assets instead of cooperating in SPOE resolution. In this case, a multiple-point-of-entry (MPOE) resolution, where loss-absorbing capital is preassigned, is more robust. Our analysis highlights a fundamental link between efficient bank resolution and the operational structures and risks of global banks.

JEL-codes: G01 G18 G21 G33 (search for similar items in EconPapers)
Date: 2018-06
New Economics Papers: this item is included in nep-ban and nep-ifn
Note: CF
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Citations: View citations in EconPapers (19)

Published as Patrick Bolton & Martin Oehmke, 2019. "Bank Resolution and the Structure of Global Banks," The Review of Financial Studies, vol 32(6), pages 2384-2421.

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