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The funds concentration effect and discriminatory bailout

In the presence of macroeconomic shocks severe enough to threaten the liquidity or solvency of the banking system, the regulator can rely on the funds concentration effect to save long-term investment projects. Some banks are forced into bankruptcy with the result that other banks obtain more new fu...

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Bibliographic Details
Main Authors: Erlenmaier, Ulrich (Author) , Gersbach, Hans (Author)
Format: Book/Monograph Working Paper
Language:English
Published: München CESifo 2001
Series:CESifo Working Paper 591
In: CESifo working papers (591)

Subjects:
Arbeitspapier
Graue Literatur
Unternehmenssanierung
Einlagensicherung
Bankenkrise
Konzentration
Fonds
Finanzintermediäre
Online Access:Resolving-System, Volltext: http://hdl.handle.net/10419/75690
Verlag, Volltext: http://www.cesifo-group.de/ifoHome/publications/working-papers/CESifoWP/CESifoWPdetails?wp_id=14560731
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Author Notes:Ulrich Erlenmaier; Hans Gersbach
Description
Summary:In the presence of macroeconomic shocks severe enough to threaten the liquidity or solvency of the banking system, the regulator can rely on the funds concentration effect to save long-term investment projects. Some banks are forced into bankruptcy with the result that other banks obtain more new funds and remain solvent. We investigate two different implementations of the funds concentration effect and the corresponding discriminatory bailout scheme: “random bailout“ and “bailout the big ones“. While the latter can be problematic in terms of stability, it is superior to the former in terms of welfare and credibility.
Physical Description:Online Resource
Format:Systemvoraussetzungen: PDF Reader.

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