Bail-Ins and Bailouts: Incentives, Connectivity, and Systemic Stability

• 成果类型: Article
• 署名作者: Bernard, Benjamin; Capponi, Agostino; Stiglitz, Joseph E.
• 署名单位: National Taiwan University
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/719758
• 发表日期: 2022
• 页码: 1805-1859
• 关键词: time-inconsistency; RISK; contagion

摘要

This paper endogenizes intervention in financial crises as the strategic negotiation between a regulator and creditors of distressed banks. Incentives for banks to contribute to a voluntary bail-in arise from their exposure to financial contagion. In equilibrium, a bail-in is possible only if the regulator's threat to not bail out insolvent banks is credible. Contrary to models without intervention or with government bailouts only, sparse networks enhance welfare for two main reasons: they improve the credibility of the regulator's no-bailout threat for large shocks, and they reduce free-riding incentives among bail-in contributors when the threat is credible.