11 Dynamic Inconsistency of Capital Forbearance Long-Run Versus Short-Run Effects of Too-Big-to-Fail Policymaking
Author: Edward Kane1
  • 1 0000000404811396https://isni.org/isni/0000000404811396International Monetary Fund
Language:
English
Keywords:
SEM; market; bank; rating; market participant; market discipline; IMF surveillance; risk profile; government regulator; Financial sector stability; Credit; Credit risk; Financial Sector Assessment Program; Global; Europe; Southeast Asia; East Asia; Asia and Pacific; risk characteristic; insolvent firm; coordination-cost issue; insolvency approach; firm from shareholder; Bank solvency; Solvency; Systemically important financial institutions; Bank resolution; Asset valuation

Abstract

During the last 20 years, concepts taken from the fields of corporate finance and efficient contracting have thrown new light on issues of bank regulation. Corporate finance theory portrays regulation as a multiparty chain of asymmetrically informed principal-agent relationships (e.g., Kane, 1999). Optimal-contracting theory emphasizes the desirability of minimizing the coordination costs that these multiparty chains of agency contracts generate (Jensen and Meckling, 1975).

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ISBN:
9781589060128
Publication Date:
29 Apr 2002
Publisher:
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DOI:
https://doi.org/10.5089/9781589060128.072
Pages:
570