Safety-Net Benefits Conferred on Difficult-to-Fail-and-Unwind Banks in the US and EU Before and During the Great Recession
Edward Kane () and
Authors registered in the RePEc Author Service: Francisco Rodríguez Fernández () and
Santiago Carbo Valverde ()
No 16787, NBER Working Papers from National Bureau of Economic Research, Inc
This paper models and estimates ex ante safety-net benefits at a sample of large banks in US and Europe during 2003-2008. Our results suggest that difficult-to-fail and unwind (DFU) banks enjoyed substantially higher ex ante benefits than other institutions. Safety-net benefits prove significantly larger for DFU firms in Europe and bailout decisions less driven by asset size than in the US. We also find that a proxy for regulatory capture helps to explain bailout decisions in Europe. A policy implication of our findings is that authorities could better contain safety-net benefits if they refocused their information systems on measuring volatility as well as capital.
JEL-codes: G01 G2 G21 G28 G38 K2 (search for similar items in EconPapers)
Note: CF IFM ME PE POL
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Published as Santiago Carbo-Valverde & Edward J. Kane & Francisco Rodriquez-Fernandez, 2011. "Safety-net benefits conferred on difficulty-to-fail-and-unwind banks in the U.S. and EU before and during the Great Recession," Proceedings, Federal Reserve Bank of Chicago, issue May, pages 327-332.
Published as CarbÃ³-Valverde, Santiago & Kane, Edward J. & Rodriguez-Fernandez, Francisco, 2013. "Safety-net benefits conferred on difficult-to-fail-and-unwind banks in the US and EU before and during the great recession," Journal of Banking & Finance, Elsevier, vol. 37(6), pages 1845-1859.
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Journal Article: Safety-net benefits conferred on difficult-to-fail-and-unwind banks in the US and EU before and during the great recession (2013)
Working Paper: Safety-net benefits conferred on difficulty-to-fail-and-unwind banks in the U.S. and EU before and during the Great Recession (2011)
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