Arbeitspapier
Financial crisis resolution
This paper studies a dynamic version of the Holmstrom-Tirole model of intermediated finance. I show that competitive equilibria are not constrained efficient when the economy experiences a financial crisis. A pecuniary externality entails that banks' desire to accumulate capital over time aggravates the scarcity of informed capital during the financial crisis. I show that a constrained social planner finds it beneficial to introduce a permanent wedge between the deposit rate and the economy's marginal rate of transformation. The wedge improves borrowers' access to finance during a financial crisis by strengthening banks' incentives to provide intermediation services. I propose a simple implementation of the constrained-efficient allocation that limits bank size.
- Sprache
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Englisch
- Erschienen in
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Series: Bank of Canada Working Paper ; No. 2012-42
- Klassifikation
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Wirtschaft
Financial Crises
General Financial Markets: General (includes Measurement and Data)
General Equilibrium and Disequilibrium: Financial Markets
General Financial Markets: Government Policy and Regulation
Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
- Thema
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Financial system regulation and policies
Financial markets
- Ereignis
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Geistige Schöpfung
- (wer)
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Schroth, Josef
- Ereignis
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Veröffentlichung
- (wer)
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Bank of Canada
- (wo)
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Ottawa
- (wann)
-
2012
- DOI
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doi:10.34989/swp-2012-42
- Handle
- Letzte Aktualisierung
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20.09.2024, 08:22 MESZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Schroth, Josef
- Bank of Canada
Entstanden
- 2012