Evidence from the Bond Market on Banks’ “Too-Big-to-Fail” Subsidy

Joao Santos

No 201404326b, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Yesterday’s post presented evidence on a possible upside of very large banks, namely, lower costs. In today’s post, we focus on a possible downside, that is, whether investors in the primary bond market “discount” risk when they invest in bonds of the too-big-to-fail banks.

Keywords: Continental Illinois; large bank holding companies; largest banks; efficiency ratio; cost advantage; discount; nonbank financial institutions (search for similar items in EconPapers)
JEL-codes: G2 (search for similar items in EconPapers)
Date: 2014-03-26
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Citations: View citations in EconPapers (14)

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Journal Article: Evidence from the bond market on banks’ “Too-Big-to-Fail” subsidy (2014)
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