Safety-net benefits conferred on difficult-to-fail-and-unwind banks in the US and EU before and during the Great Recession
By: Santiago Carbo-Valverde, Edward J. Kane, Francisco Rodriguez-Fernandez
Contributors: Kane, Edward J.; Rodriguez-Fernandez, Francisco; National Bureau of Economic Research
Series: NBER working paper series -- working paper 16787; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 16787.
Publisher: National Bureau of Economic Research
Published: 2011
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "This paper models and estimates ex ante safety-net benefits at a sample of large banks in US and Europe during 2003-2008.  Our results suggest that difficult-to-fail and unwind (DFU) banks enjoyed substantially higher ex ante benefits than other institutions.  Safety-net benefits prove significantly larger for DFU firms in Europe and bailout decisions less driven by asset size than in the US.  We also find that a proxy for regulatory capture helps to explain bailout decisions in Europe.  A policy implication of our findings is that authorities could better contain safety-net benefits if they refocused their information systems on measuring volatility as well as capital"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 5/10/2011.

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