 Bank Debt Guarantee ProgramsJournal of Financial Crises, 2020, vol. 2, issue 3, 71-100 Abstract: One of the hallmarks of the global financial crisis of 2007-09 was the rapid evaporation of the non-deposit, wholesale funding many financial institutions had become increasingly reliant upon in the years leading up to the crisis. In the aftermath of the Lehman Brothers bankruptcy, governments became increasingly concerned about even fundamentally sound institutions' ability to access necessary funding. In response, beginning in October 2008, authorities across the globe began introducing guarantee programs enabling institutions to issue debt that would be backed by a guarantee from the government in exchange for a guarantee fee. While the specific details of these programs varied (sometimes widely in ways that allow for interesting comparisons), some version of this basic idea was implemented by over twenty countries. The programs saw significant use in the aggregate but were not uniformly utilized. They are generally seen as having achieved their objectives but may also in certain circumstances have had unintended consequences such as market distortions based on flawed fee structures and the crowding out of non-guaranteed debt. Keywords: credit guarantee; bond guarantee; debt guarantee; short-term debt; medium-term debt; wholesale funding (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ysm:ypfsfc:232626 Access Statistics for this article More articles in Journal of Financial Crises from Yale Program on Financial Stability (YPFS) Contact information at EDIRC. |
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