Eintrag weiter verarbeiten
Government debt and banking fragility: the spreading of strategic uncertainty
Gespeichert in:
Personen und Körperschaften: | , |
---|---|
Titel: | Government debt and banking fragility: the spreading of strategic uncertainty/ Russell Cooper, Kalin Nikolov |
Format: | E-Book |
Sprache: | Englisch |
veröffentlicht: |
Frankfurt am Main, Germany
European Central Bank
[2018]
|
Gesamtaufnahme: |
Europäische Zentralbank: Working paper series ; no 2195 (November 2018)
|
Quelle: | Verbunddaten SWB Lizenzfreie Online-Ressourcen |
Zusammenfassung: | This paper studies the interaction of government debt and financial markets. This interaction, termed a "diabolic loop", is driven by government choice to bail out banks and the resulting incentives for banks to hold government debt rather than self-insure through equity buffers. We highlight the role of bank equity issuance in determining whether the "diabolic loop" is a Nash Equilibrium of the interaction between banks and the government. When equity is issued, no diabolic loop exists. In equilibrium, banks' rational expectations of a bailout ensure that no equity is issued and the sovereign-bank loop is operative. |
---|---|
Umfang: | 1 Online-Ressource (circa 66 Seiten); Illustrationen |
ISBN: |
9789289933001
9289933003 |
DOI: | 10.2866/888615 |