A theory of government bailouts in a heterogeneous banking system
Autor(a) principal: | |
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Data de Publicação: | 2017 |
Outros Autores: | |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | http://hdl.handle.net/10400.5/23953 |
Resumo: | How should a government bailout a heterogeneous banking system subject to systemic self-fulfilling runs? To answer this question, we develop a theory of banking with multiple groups of depositors of different size and wealth, where systemic self-fulfilling runs emerge as a consequence of a global game, and a government uses a public good to bailout banks through liquidity injections. In this framework, we characterize the endogenous probability of a systemic self-fulfilling run, and the conditions under which a full bailout cannot be part of the equilibrium. The optimal bailout strategy should target those banks whose bailout has the largest marginal impact on the probability of a systemic self-fulfilling run, and whose depositors are at the lower end of the wealth distribution. |
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A theory of government bailouts in a heterogeneous banking systemFinancial IntermediationBank RunsBailoutsHeterogeneous AgentsGlobal GamesHow should a government bailout a heterogeneous banking system subject to systemic self-fulfilling runs? To answer this question, we develop a theory of banking with multiple groups of depositors of different size and wealth, where systemic self-fulfilling runs emerge as a consequence of a global game, and a government uses a public good to bailout banks through liquidity injections. In this framework, we characterize the endogenous probability of a systemic self-fulfilling run, and the conditions under which a full bailout cannot be part of the equilibrium. The optimal bailout strategy should target those banks whose bailout has the largest marginal impact on the probability of a systemic self-fulfilling run, and whose depositors are at the lower end of the wealth distribution.Banco de PortugalRepositório da Universidade de LisboaGarcia, FilomenaPanetti, Ettore2022-03-29T17:06:17Z2017-072017-07-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10400.5/23953engGarcia, Filomena and Ettore Panetti .2017. “A theory of government bailouts in a heterogeneous banking system” .Banco de Portugal. Economic and Research Department. Working Papers nº 16 | 2017.2182-0422info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-03-06T14:53:35Zoai:www.repository.utl.pt:10400.5/23953Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T17:08:06.220746Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse |
dc.title.none.fl_str_mv |
A theory of government bailouts in a heterogeneous banking system |
title |
A theory of government bailouts in a heterogeneous banking system |
spellingShingle |
A theory of government bailouts in a heterogeneous banking system Garcia, Filomena Financial Intermediation Bank Runs Bailouts Heterogeneous Agents Global Games |
title_short |
A theory of government bailouts in a heterogeneous banking system |
title_full |
A theory of government bailouts in a heterogeneous banking system |
title_fullStr |
A theory of government bailouts in a heterogeneous banking system |
title_full_unstemmed |
A theory of government bailouts in a heterogeneous banking system |
title_sort |
A theory of government bailouts in a heterogeneous banking system |
author |
Garcia, Filomena |
author_facet |
Garcia, Filomena Panetti, Ettore |
author_role |
author |
author2 |
Panetti, Ettore |
author2_role |
author |
dc.contributor.none.fl_str_mv |
Repositório da Universidade de Lisboa |
dc.contributor.author.fl_str_mv |
Garcia, Filomena Panetti, Ettore |
dc.subject.por.fl_str_mv |
Financial Intermediation Bank Runs Bailouts Heterogeneous Agents Global Games |
topic |
Financial Intermediation Bank Runs Bailouts Heterogeneous Agents Global Games |
description |
How should a government bailout a heterogeneous banking system subject to systemic self-fulfilling runs? To answer this question, we develop a theory of banking with multiple groups of depositors of different size and wealth, where systemic self-fulfilling runs emerge as a consequence of a global game, and a government uses a public good to bailout banks through liquidity injections. In this framework, we characterize the endogenous probability of a systemic self-fulfilling run, and the conditions under which a full bailout cannot be part of the equilibrium. The optimal bailout strategy should target those banks whose bailout has the largest marginal impact on the probability of a systemic self-fulfilling run, and whose depositors are at the lower end of the wealth distribution. |
publishDate |
2017 |
dc.date.none.fl_str_mv |
2017-07 2017-07-01T00:00:00Z 2022-03-29T17:06:17Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/10400.5/23953 |
url |
http://hdl.handle.net/10400.5/23953 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
Garcia, Filomena and Ettore Panetti .2017. “A theory of government bailouts in a heterogeneous banking system” .Banco de Portugal. Economic and Research Department. Working Papers nº 16 | 2017. 2182-0422 |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.publisher.none.fl_str_mv |
Banco de Portugal |
publisher.none.fl_str_mv |
Banco de Portugal |
dc.source.none.fl_str_mv |
reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação instacron:RCAAP |
instname_str |
Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
instacron_str |
RCAAP |
institution |
RCAAP |
reponame_str |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
collection |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
repository.name.fl_str_mv |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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1799131175161167872 |