Bank Bailouts : Moral Hazard vs. Value Effect

This paper shows that a central bank, by announcing and committing ex-ante to a bailout policy that is contingent on the realization of certain states of nature (for example on the occurrence of an adverse macroeconomic shock), creates a risk-reducing "value effect" that more than outweigh...

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Main Author: Levy Yeyati, Eduardo
Other Authors: Cordella, Tito
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 1999, 1999
Series:IMF Working Papers; Working Paper
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Summary:This paper shows that a central bank, by announcing and committing ex-ante to a bailout policy that is contingent on the realization of certain states of nature (for example on the occurrence of an adverse macroeconomic shock), creates a risk-reducing "value effect" that more than outweighs the moral hazard component of such a policy
Physical Description:30 p.
ISBN:9781451852875
1451852878