Bail-in and Bailout: Friends or Foes?

• 成果类型: Article
• 署名作者: Pandolfi, Lorenzo
• 署名单位: University of Naples Federico II; University of Naples Federico II
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2020.3883
• 发表日期: 2022
• 页码: 1450-1468
• 关键词: bail-in; Bailout; moral hazard; resolution policies; Bank regulation

摘要

This paper analyzes the effects of bail-in and bailout policies on banks' funding costs, incentives for loan monitoring, and financing capacity. In a model with moral hazard and two investment stages, a full bail-in turns out to be, ex post, the optimal policy to deal with a failing bank. Unlike a bailout, it allows the government to recapitalize the bank without resorting to distortionary taxes. As a consequence, however, investors expect bailins rather than bailouts. Ex ante, this raises banks' cost of debt and depresses bankers' incentives to monitor. When moral hazard is severe, this time inconsistency leads to a credit market collapse in which productive projects are not financed, unless the government precommits to an alternative resolution policy. The optimal policy is either a combination of bail-in and bailout-in which the government uses a minimal amount of public transfers to lower banks' cost of debt-or liquidation, depending on the severity of moral hazard and the shadow cost of the partial bailout.