Farhi, Emmanuel and Tirole, Jean (2012) Collective Moral Hazard, Maturity Mismatch and Systemic Bailouts. American Economic Review (AER), 102. pp. 60-93.
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Abstract
The paper shows that time-consistent, imperfectly targeted support to distressed institutions makes private leverage choices strategic complements. When everyone engages in maturity mismatch, authorities have little choice but intervening, creating both current and deferred (sowing the seeds of the next crisis) social costs. In turn, it is profitable to adopt a risky balance sheet. These insights have important consequences, from banks choosing to correlate their risk exposures to the need for macro-prudential supervision.
Keywords: monetary policy, funding liquidity risk, strategic complementarities, macro-prudential supervision
Item Type: | Article |
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Language: | English |
Date: | February 2012 |
Refereed: | Yes |
Uncontrolled Keywords: | monetary policy, funding liquidity risk, strategic complementarities, macro-prudential supervision |
JEL Classification: | E44 - Financial Markets and the Macroeconomy E52 - Monetary Policy (Targets, Instruments, and Effects) G28 - Government Policy and Regulation |
Subjects: | B- ECONOMIE ET FINANCE |
Divisions: | TSE-R (Toulouse) |
Site: | UT1 |
Date Deposited: | 09 Jul 2014 17:17 |
Last Modified: | 02 Apr 2021 15:47 |
OAI Identifier: | oai:tse-fr.eu:23882 |
URI: | https://publications.ut-capitole.fr/id/eprint/15102 |
Available Versions of this Item
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Collective Moral Hazard, Maturity Mismatch and Systemic Bailouts. (deposited 18 Jan 2012 06:01)
- Collective Moral Hazard, Maturity Mismatch and Systemic Bailouts. (deposited 09 Jul 2014 17:17) [Currently Displayed]