Informational rents, macroeconomic rents, and efficient bailouts
By: Thomas Philippon, Philipp Schnabl
Contributors: Schnabl, Philipp; National Bureau of Economic Research
Series: NBER working paper series -- working paper 16727; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 16727.
Publisher: National Bureau of Economic Research
Published: 2011
Place of publication: Cambridge, MA
Language: eng
Format: [electronic resource] /
Description: "We analyze government interventions to alleviate debt overhang among banks.  Interventions generate two types of rents.  Informational rents arise from opportunistic participation based on private information while macroeconomic rents arise from free riding.  Minimizing informational rents is a security design problem and we show that warrants and preferred stocks are the optimal instruments.  Minimizing macroeconomic rents requires the government to condition implementation on sufficient participation.  Informational rents always impose a cost, but if macroeconomic rents are large, efficient recapitalizations can be profitable"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 4/28/2011.

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