Forbearance and prompt corrective action
by Narayana Rao Kocherlakota
This paper investigates whether a bank regulator should terminate problem banks promptly or exercise forbearance. We construct a dynamic model economy in which entrepreneurs pledge collateral, borrow from banks, and invest in long-term projects. We assume that collateral value has aggregate risk over time, that in any period entrepreneurs can abscond with the projects but losing the collateral, and that depositors can withdraw deposits. We show that optimal regulation exhibits forbearance if the ex-ante probability of collapse in collateral value is sufficiently low, but exhibits prompt termination of problem banks if this probability is sufficiently high.
Buy this book
| Edition | Availability |
|---|---|
1
Forbearance and prompt corrective action
2005, Bank for International Settlements
Electronic resource
in English
|
aaaa
|
Book Details
Edition Notes
Includes bibliographical references.
Title from PDF file (viewed on June 22, 2005).
"Monetary and Economic Department."
"May 2005."
Also available in print.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.
Classifications
External Links
The Physical Object
Edition Identifiers
Work Identifiers
Community Reviews (0)
Lists
See All
History
- Created April 1, 2008
- 5 revisions
Wikipedia citation
×CloseCopy and paste this code into your Wikipedia page. Need help?
| December 13, 2020 | Edited by MARC Bot | import existing book |
| July 29, 2012 | Edited by VacuumBot | Updated format '[electronic resource] /' to 'Electronic resource' |
| December 12, 2009 | Edited by WorkBot | link works |
| October 31, 2008 | Edited by ImportBot | add URIs from original MARC record |
| April 1, 2008 | Created by an anonymous user | Imported from Scriblio MARC record |