Uncertainty as commitment

• 成果类型: Article
• 署名作者: Nosal, Jaromir B.; Ordonez, Guillermo
• 署名单位: Boston College; University of Pennsylvania; National Bureau of Economic Research
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2016.06.001
• 发表日期: 2016
• 页码: 124-140
• 关键词: imperfect information; COMMITMENT; Bailouts; moral hazard; time consistency

摘要

When governments cannot commit to not providing bailouts, banks may take excessive risks and generate crises. At the outbreak of a financial crisis, however, governments are usually uncertain about its systemic nature, and may delay intervention to learn more from endogenous market outcomes. We show such delay introduces strategic restraint: banks restrict their portfolio riskiness relative to their peers to avoid being the worst performers and bearing the costs of delay. Hence, uncertainty has the potential to self-discipline banks and mitigate crises in the absence of commitment. We study the effects of standard regulations on these novel forces. (C) 2016 Elsevier B.V. All rights reserved.