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- Title
Resolving banking crises -- an analysis of policy options.
- Authors
Tanaka, Misa; Hoggarth, Glenn
- Abstract
The paper discusses the development of a simple framework which can be used to analyze alternative policies to restructure failed banks when the authorities cannot observe banks' balance sheets. It demonstrates that weak banks have the incentives to hold on to the non-performing loans and gamble for the small chances of recovering the loans without recovery intervention. It also shows that the cost of subsidy can be reduced if it is offered in a menu that includes equity injection.
- Subjects
BANKING industry; CORPORATE reorganizations; ORGANIZATIONAL structure; BANKRUPTCY reorganization; NONPERFORMING loans; BANK loans; SUBSIDIES
- Publication
Bank of England Quarterly Bulletin, 2006, Vol 46, Issue 2, p174
- ISSN
0005-5166
- Publication type
Article