Systemic Financial Crises: Resolving Large Bank Insolvencies

Systemic Financial Crises: Resolving Large Bank Insolvencies

by Douglas D. Evanoff
     
 

Bank failures, like illness and taxes, are almost a certainty at some time in the future. What is less certain is their cost to and adverse implications for macroeconomies. Past failures have frequently been resolved at very high cost to society. However, the cost could be reduced through having a well-developed, credible and widely publicized plan ready to put into… See more details below

Overview

Bank failures, like illness and taxes, are almost a certainty at some time in the future. What is less certain is their cost to and adverse implications for macroeconomies. Past failures have frequently been resolved at very high cost to society. However, the cost could be reduced through having a well-developed, credible and widely publicized plan ready to put into action by policymakers. If no such plan is ready when a large bank approaches insolvency, political pressures are likely to influence the response of regulators.

Minimizing immediate, short-run costs are likely to outweigh minimizing further out, longer-run and longer-lasting costs, even if these delayed costs promise to be substantially greater. Stated differently, today will win out over tomorrow and politics will trump economics. How best to prevent such unfavorable outcomes is the major theme of this volume. The articles presented review past insolvency resolutions, draw lessons from these resolutions, discuss impediments to efficient resolutions - including cross-country, cross-regulator, and institutional challenges - and recommend how to move forward.

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Product Details

ISBN-13:
9789812563484
Publisher:
World Scientific Publishing Company, Incorporated
Publication date:
09/18/2005
Pages:
476
Product dimensions:
6.30(w) x 9.00(h) x 1.20(d)

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Table of Contents

Being a responsible host : supervising foreign-owned banks3
Dealing with stress at large and complex financial institutions17
Changes in the structure of the U.S. financial system and implications for systemic risk29
The resolution of systemic banking system crises41
The deposit insurer's role in maintaining financial stability59
The IMF-World Bank financial sector assessment program : a view from the inside69
Financial stability and bank solvency83
A note on financial stability115
Impediments to fair and efficient resolution of large banks and banking crises123
Dealing with financial fragility in transition economies141
The resolution of systemic banking system crises : the way forward159
Mistakes of bank crisis response169
Breaking up is hard to do : an essay on cross-border challenges in resolving financial groups175
"Too big to save" - toward a functional approach to resolving crises in global financial institutions193
Europe's universalist approach to cross-border bank resolution issues217
Comments on financial institution resolution : cross-border issues237
Multiple regulators and resolutions253
The role of the safety net in resolving large financial institutions275
Comments on key policy challenges in financial institution resolution : additional complexities307
BCCI & barings : bank resolutions complicated by fraud and global corporate structure321
Derivatives and systemic risk : what role can the bankruptcy code play?347
Argentina and Uruguay in the 2000s : two contrasting experiences of banking crisis resolution365
Comments on lessons from case studies of large insolvencies391
The reserve bank of New Zealand's creditor recapitalization (BCR) project : an option for resolving large banks?397
Planning for efficient resolution407
Resolving a large bank : the FDIC's perspective415
Arrangements for financial stability in OECD and EU countries421
Constructive commitments : communicating plans to impose losses on large bank creditors441

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