Does size matter? Bailouts with large and small banks

• 成果类型: Article
• 署名作者: Davila, Eduardo; Walther, Ansgar
• 署名单位: Yale University; Imperial College London
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2019.09.005
• 发表日期: 2020
• 页码: 1-22
• 关键词: Bailouts; Bank regulation; Too big to fail; Too many to fail; Size tax

摘要

We explore how large and small banks make funding decisions when system-wide bailouts are possible. We show that bank size, purely on strategic grounds, is a key determinant of banks' leverage choices, even when bailout policies treat large and small banks symmetrically. Large banks leverage more than small banks because they internalize that their decisions directly affect bailout policies. In equilibrium, this effect is amplified by strategic spillovers to small banks since banks' leverage choices are strategic complements. Overall, the presence of large banks makes bailouts more likely. The optimal regulation features size-dependent policies that disproportionately restrict large banks' leverage. (C) 2019 Elsevier B.V. All rights reserved.