Bank Failures: The Limitations of Risk Modelling

Patrick Honohan ()

The Institute for International Integration Studies Discussion Paper Series from IIIS

Abstract: Overconfidence on the part of bankers and regulators in mechanical risk management models is an important and distinctive driver of bank failures in the current crisis. This paper illustrates the process by drawing on brief case studies of a handful of the biggest failures and losses. There are significant implications for a more holistic and less mechanical approach to risk management and prudential regulation.

New Economics Papers: this item is included in nep-ban, nep-reg and nep-rmg
Date: 2008-10-01
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