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The Benefits and Costs of the TARP Bailouts: A Critical Assessment

Allen N. Berger
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Allen N. Berger: University of South Carolina, 1014 Greene Street, Columbia, SC 29208, USA2Wharton Financial Institutions Center, USA3European Banking Center, The Netherlands

Quarterly Journal of Finance (QJF), 2018, vol. 08, issue 02, 1-29

Abstract: We assess benefits and costs of the Troubled Asset Relief Program (TARP) based on theory, data, and empirical research to date. TARP was intended to attenuate systemic risk and improve the real economy, and we focus on these as the most important potential effects of the program. Evidence suggests mostly short-term social benefits in reducing systemic risk and improving the real economy. However, long-term evidence is limited — suggesting relatively long-lasting real economic improvements that might be offset by long-term increases in systemic risk. We give TARP a grade of “incomplete,” pending further research, and suggest some directions for this research.

Keywords: TARP; banks; bailouts; financial crises (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1142/S2010139218500118

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