Regulatory forbearance: A reconsideration

William Gissy ()

International Advances in Economic Research, 2000, vol. 6, issue 4, 722-729

Abstract: Critics of regulatory forebearance argue that the resulting moral hazard produces higher costs when a depository institution is ultimately resolved. This paper derives a formula for the minimal survival rate necessary to make forbearance the least cost policy. When applied to the empirical results produced by critics of the policy, it appears that the forbearance practice of the 1980s was a cost saver to taxpayers. Copyright International Atlantic Economic Society 2000

Date: 2000
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DOI: 10.1007/BF02295382

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