Preventing Zombie Lending

• 成果类型: Article
• 署名作者: Bruche, Max; Llobet, Gerard
• 署名单位: City St Georges, University of London
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hht064
• 发表日期: 2014
• 页码: 923
• 关键词: Bank bailouts; Countervailing incentives; transition economies; adverse selection; JAPAN; INFORMATION; DESIGN; credit; COSTS

摘要

Because of limited liability, insolvent banks have an incentive to continue lending to insolvent borrowers, in order to hide losses and gamble for resurrection, even though this is socially inefficient. We suggest a scheme that regulators could use to solve this problem. The scheme would induce banks to reveal their bad loans, which can then be dealt with. Bank participation in the scheme would be voluntary. Even though banks have private information on the quantity of bad loans on their balance sheets, the scheme avoids creating windfall gains for bank equity holders. In addition, some losses can be imposed on debt holders.