Rules versus Discretion in Bank Resolution

• 成果类型: Article
• 署名作者: Walther, Ansgar; White, Lucy
• 署名单位: Imperial College London; Center for Economic & Policy Research (CEPR); Boston University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhaa032
• 发表日期: 2020
• 页码: 5594
• 关键词: Security design; monetary-policy; continuous-time; moral hazard; Bailouts; RISK

摘要

Recent reforms have given regulators broad powers to bail-in bank creditors during financial crises. We analyze efficient bail-ins and their implementation. To preserve liquidity, regulators must avoid signaling negative private information to creditors. Therefore, optimal bail-ins in bad times only depend on public information. As a result, the optimal policy cannot be implemented if regulators have wide discretion, due to an informational time-inconsistency problem. Rules mandating tough bail-ins after bad public signals, or contingent convertible (co-co) bonds, improve welfare. We further show that bail-in and bailout policies are complementary: if bailouts are possible, then discretionary bail-ins are more effective.