Bank Resolution Concepts, Tradeoffs, and Changes in Practices.

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  • Additional Information
    • Abstract:
      During the recent crisis, we observed the failure or near failure of some of the world's largest financial institutions, requiring the regulators to intervene to resolve these institutions. Banks and financial intermediaries perform important functions such as channeling resources from savers to productive projects and providing important payment services to their customers through their money-like liabilities. Hence, their failure can result in costs for the economy and an efficient resolution mechanism can mitigate such costs. In this paper, we provide a discussion of the costs associated with bank failures, the methods used by regulators to resolve banks, and the costs of different methods. Furthermore, we provide a simple framework to analyze the optimality of resolution methods. We show that while private resolution methods, such as sale to a healthy bank, are preferred options, they may not be feasible during systemic crises. Hence, regulators need to employ a state-contingent resolution mechanism. Resolution during a systemic crisis entails tradeoffs between disruptions arising from a disorderly liquidation and potential moral hazard resulting from the use of public funds. [ABSTRACT FROM AUTHOR]
    • Abstract:
      Copyright of Economic Policy Review (19320426) is the property of Federal Reserve Bank of New York and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)
    • Author Affiliations:
      1Research officer, Federal Reserve Bank of New York
    • ISSN:
      1932-0426
    • Accession Number:
      95756596
  • Citations
    • ABNT:
      WHITE, P.; TANJU YORULMAZER. Bank Resolution Concepts, Tradeoffs, and Changes in Practices. Economic Policy Review (19320426), [s. l.], v. 20, n. 2, p. 1–37, 2014. Disponível em: http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=a9h&AN=95756596&custid=s6224580. Acesso em: 18 jan. 2020.
    • AMA:
      White P, Tanju Yorulmazer. Bank Resolution Concepts, Tradeoffs, and Changes in Practices. Economic Policy Review (19320426). 2014;20(2):1-37. http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=a9h&AN=95756596&custid=s6224580. Accessed January 18, 2020.
    • APA:
      White, P., & Tanju Yorulmazer. (2014). Bank Resolution Concepts, Tradeoffs, and Changes in Practices. Economic Policy Review (19320426), 20(2), 1–37. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=a9h&AN=95756596&custid=s6224580
    • Chicago/Turabian: Author-Date:
      White, Phoebe, and Tanju Yorulmazer. 2014. “Bank Resolution Concepts, Tradeoffs, and Changes in Practices.” Economic Policy Review (19320426) 20 (2): 1–37. http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=a9h&AN=95756596&custid=s6224580.
    • Harvard:
      White, P. and Tanju Yorulmazer (2014) ‘Bank Resolution Concepts, Tradeoffs, and Changes in Practices’, Economic Policy Review (19320426), 20(2), pp. 1–37. Available at: http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=a9h&AN=95756596&custid=s6224580 (Accessed: 18 January 2020).
    • Harvard: Australian:
      White, P & Tanju Yorulmazer 2014, ‘Bank Resolution Concepts, Tradeoffs, and Changes in Practices’, Economic Policy Review (19320426), vol. 20, no. 2, pp. 1–37, viewed 18 January 2020, .
    • MLA:
      White, Phoebe, and Tanju Yorulmazer. “Bank Resolution Concepts, Tradeoffs, and Changes in Practices.” Economic Policy Review (19320426), vol. 20, no. 2, Mar2014 Special Issue 2014, pp. 1–37. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=a9h&AN=95756596&custid=s6224580.
    • Chicago/Turabian: Humanities:
      White, Phoebe, and Tanju Yorulmazer. “Bank Resolution Concepts, Tradeoffs, and Changes in Practices.” Economic Policy Review (19320426) 20, no. 2 (Mar2014 Special Issue 2014): 1–37. http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=a9h&AN=95756596&custid=s6224580.
    • Vancouver/ICMJE:
      White P, Tanju Yorulmazer. Bank Resolution Concepts, Tradeoffs, and Changes in Practices. Economic Policy Review (19320426) [Internet]. 2014 Mar2014 Special Issue [cited 2020 Jan 18];20(2):1–37. Available from: http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=a9h&AN=95756596&custid=s6224580