Moral hazard and optimal subsidiary structure for financial institutions

• 成果类型: Article
• 署名作者: Kahn, C; Winton, A
• 署名单位: University of Illinois System; University of Illinois Chicago; University of Illinois Chicago Hospital; University of Minnesota System; University of Minnesota Twin Cities
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2004.00708.x
• 发表日期: 2004
• 页码: 2531-2575
• 关键词: debt; RISK; intermediation; equilibrium; banks; FIRMS

摘要

Banks and related financial institutions often have two separate subsidiaries that make loans of similar type but differing risk, for example, a bank and a finance company, or a good bank/bad bank structure. Such bipartite structures may prevent risk shifting, in which banks misuse their flexibility in choosing and monitoring loans to exploit their debt holders. By insulating safer loans from riskier loans, a bipartite structure reduces risk-shifting incentives in the safer subsidiary. Bipartite structures are more likely to dominate unitary structures as the downside from riskier loans is higher or as expected profits from the efficient loan mix are lower.