Arbeitspapier
Resolving filed banks: Uncertainty, multiple bidding & auction design
The Federal Deposit Insurance Corporation (FDIC) resolves insolvent banks using an auction process in which bidding is multidimensional and the rule used to evaluate bids along the different dimensions is proprietary. Uncertainty about the scoring rule leads banks to simultaneously submit multiple differentiated bids. This resolution mechanism typically results in considerable losses for the FDIC-$90 billion during the financial crisis. The objective of this paper is to see whether the mechanism could be improved. To do so, we propose a methodology for analyzing auction environments where bids are ranked according to multiple attributes chosen by bidders, but where there is uncertainty about the scoring rule used to evaluate the different components of the bids. Using this framework, which extends structural estimation techniques for combinatorial auctions, and FDIC data summarizing bids, we back out the underlying preferences of banks for failed institutions. With these we perform counterfactuals in which we eliminate uncertainty and/or multiple bidding. Our findings suggest that the FDIC could reduce the cost of resolution by around 17 percent by announcing the scoring rule before bidding begins.
- Sprache
-
Englisch
- Erschienen in
-
Series: Bank of Canada Staff Working Paper ; No. 2019-30
- Klassifikation
-
Wirtschaft
Econometrics of Games and Auctions
Auctions
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- Thema
-
Financial institutions
Econometric and statistical methods
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Allen, Jason
Clark, Robert
Hickman, Brent
Richert, Eric
- Ereignis
-
Veröffentlichung
- (wer)
-
Bank of Canada
- (wo)
-
Ottawa
- (wann)
-
2019
- DOI
-
doi:10.34989/swp-2019-30
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Allen, Jason
- Clark, Robert
- Hickman, Brent
- Richert, Eric
- Bank of Canada
Entstanden
- 2019
Ähnliche Objekte (12)
Resolving failed banks: Uncertainty, multiple bidding & auction design
Price level versus inflation targeting under model uncertainty
The effects of oil price uncertainty on the macroeconomy
Integrating uncertainty and monetary policy-making: A practitioner's perspective
What Fed funds futures tell us about monetary policy uncertainty
Comparison of auction formats in Canadian government auctions
Uncertainty, inflation, and welfare
Model uncertainty and wealth distribution
International Spillovers of Policy Uncertainty
Communicating uncertainty in monetary policy
Interest rate uncertainty as a policy tool
Identification and estimation of risk aversion in first-price auctions with unobserved auction heterogeneity
Resolving failed banks: Uncertainty, multiple bidding & auction design
Price level versus inflation targeting under model uncertainty
The effects of oil price uncertainty on the macroeconomy
Integrating uncertainty and monetary policy-making: A practitioner's perspective
What Fed funds futures tell us about monetary policy uncertainty
Comparison of auction formats in Canadian government auctions
Uncertainty, inflation, and welfare
Model uncertainty and wealth distribution
International Spillovers of Policy Uncertainty
Communicating uncertainty in monetary policy
Interest rate uncertainty as a policy tool
Identification and estimation of risk aversion in first-price auctions with unobserved auction heterogeneity
Resolving failed banks: Uncertainty, multiple bidding & auction design
Price level versus inflation targeting under model uncertainty
The effects of oil price uncertainty on the macroeconomy
Integrating uncertainty and monetary policy-making: A practitioner's perspective
What Fed funds futures tell us about monetary policy uncertainty
Comparison of auction formats in Canadian government auctions
Uncertainty, inflation, and welfare
Model uncertainty and wealth distribution
International Spillovers of Policy Uncertainty
Communicating uncertainty in monetary policy
Interest rate uncertainty as a policy tool