Assessing Large Financial Firm Resolvability
Abstract: A large financial institution may be said to be "resolvable" if, in the event of failure, policymakers would allow it to go through bankruptcy without financial assistance from the government. The choice between bankruptcy or bailout trades off different sets of costs on the economy. This Economic Brief presents a new tool that could assist policymakers with this evaluation, potentially helping to curb the "too big to fail" problem, serving as a useful complement to the "living wills" process, and making the resolution process more transparent.
File format is application/pdf
Description: Full text
Provider: Federal Reserve Bank of Richmond
Part of Series: Richmond Fed Economic Brief
Publication Date: 2018