 Robust Exit Policies to Underpin Market DisciplineDavid Mayes, Liisa Halme and Aarno Liuksila Chapter 8 in Improving Banking Supervision, 2001, pp 198-215 from Palgrave Macmillan Abstract: Abstract Two main issues relate to the appropriate handling of problems and crises. The first concerns the incentives suggested for banks to avoid getting into difficulties in the first place. The second relates to the issues addressed by the authorities in running a system where such difficulties can be handled swiftly and smoothly without damaging the credibility of the financial system as a whole. However well run the banks and however vigilant the authorities, problems will still occur, because banking involves taking risks. Even with well-managed risks and good information about borrowers one can be unlucky. Financial accidents will occur, but their size and incidence can be reduced by robust exit policies. There is, a distinction between those general measures aimed at preventing bank failure in the first place, and the exit policies that address the problem of preventing further losses, in the event of default or failure on the part of a bank. A role for government is warranted in minimising the costs to society and organising the means for a fair distribution of the loss. Keywords: Market Discipline; Capital Adequacy; Insolvency Proceeding; Debtor Bank; Individual Bank (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-28819-5_8 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.