File(s) not publicly available
Do higher solvency ratios reduce the cost of bailing out insured banks?
journal contribution
posted on 2023-06-08, 07:57 authored by Robert EastwoodThe relationship between solvency constraints and bank behaviour in the presence of fixed rate deposit insurance is investigated. A rise in the minimum solvency ratio does not necessarily reduce the adverse consequences of moral hazard: bank efficiency may fall and expected bailout costs may rise. Such outcomes are possible even if credit risk is purely systemic. Similar results obtain in respect of level increases in bank capital, tangible or intangible, although in this case purely systemic risk excludes perverse outcomes.
History
Publication status
- Published
Journal
International Journal of Finance and EconomicsISSN
1076-9307Publisher
John Wiley and SonsExternal DOI
Issue
1Volume
9Page range
39-48Pages
10.0Department affiliated with
- Economics Publications
Full text available
- No
Peer reviewed?
- Yes
Legacy Posted Date
2012-02-06Usage metrics
Categories
No categories selectedKeywords
Licence
Exports
RefWorks
BibTeX
Ref. manager
Endnote
DataCite
NLM
DC