Are some banks too large to fail? Myth and reality
Variability and stationarity of term premia
FDICIA after five years: a review and evaluation
At yearend 1991, Congress enacted fundamental deposit insurance reform for banks and thrifts in the FDIC Improvement Act (FDICIA). This reform followed the failure of more than 2,000 depository institutions in the 1980s. Many of these failed because of the incentive incompatibility of the structure of federal government-provided deposit insurance, which encouraged moral hazard behavior by banks and poor agent behavior by regulators. Insurance was put on a more incentive compatible basis by providing for a graduated series of sanctions that mimic market discipline and first may and then must ...
The role of credit market competition on lending strategies and on capital accumulation
This paper examines the role of credit market competition in the dynamic of capital accumulation. It is shown that the lending relationship problem which seems to characterize competitive credit markets can have negative repercussions for capital accumulation. In contrast, monopoly power in banking can be beneficial for growth. A monopolist bank may lower the equilibrium quantity of credit, but it allows a better allocation of credit supply. This result reconciles with the available empirical evidence and suggests a positive role for monopoly power in banking, especially for developing ...