A Program for Minimizing the Private and Public Costs of Bank Failures

George G. Kaufman

No 2007-PB-11, NFI Policy Briefs from Indiana State University, Scott College of Business, Networks Financial Institute

Abstract: Bank failures are often perceived to be more costly to the economy than the failure of other firms of comparable size and to generate widespread public fear. As a result, preventing bank failures is a major public policy concern in all countries. Unfortunately, most public policy strategies adopted in nearly all countries to achieve this objective have eventually failed to do so, at a large cost, not only in reduced income and wealth to the failed bank’s customers and in the bank’s market area, but also to the taxpayers of the country as a whole, who have frequently been asked to finance most or all of the losses to bank depositors, other creditors, and, at times, even shareholders. The high cost of these policies has encouraged a search for more efficient ways of protecting the economy from bank failures, while permitting poorly managed or unlucky individual banks to exit but at no or little cost to either their customers or the economy. This paper proposes a four-pillar program to achieve this objective efficiently.

Keywords: bank failure; failure resolution; bank regulation (search for similar items in EconPapers)
Pages: 19 pages
Date: 2007-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.indstate.edu/business/sites/business.in ... 07-PB-11_Kaufman.pdf Full text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.indstate.edu/business/sites/business.indstate.edu/files/Docs/2007-PB-11_Kaufman.pdf [301 Moved Permanently]--> https://indianastate.edu/business/sites/business.indstate.edu/files/Docs/2007-PB-11_Kaufman.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nfi:nfipbs:2007-pb-11

Access Statistics for this paper

More papers in NFI Policy Briefs from Indiana State University, Scott College of Business, Networks Financial Institute Contact information at EDIRC.
Bibliographic data for series maintained by Ray Thomas ().