Bailouts and Financial Fragility

• 成果类型: Article
• 署名作者: Keister, Todd
• 署名单位: Rutgers University System; Rutgers University New Brunswick
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdv044
• 发表日期: 2016
• 页码: 704-736
• 关键词: Bank runs; Deposit insurance; moral hazard; liquidity; provision; MODEL

摘要

Should policy makers be prevented from bailing out investors in the event of a crisis? I study this question in a model of financial intermediation with limited commitment. When a crisis occurs, the policy maker will respond with fiscal transfers that partially cover intermediaries' losses. The anticipation of this bailout distorts ex ante incentives, leading intermediaries to become excessively illiquid and increasing financial fragility. Prohibiting bailouts is not necessarily desirable, however: while it induces intermediaries to become more liquid, it may nevertheless lower welfare and leave the economy more susceptible to a crisis. A policy of taxing short-term liabilities, in contrast, can both improve the allocation of resources and promote financial stability.