Data/hora: 09/06/2024 01:12:08

Provedor de dados: | 31
País: | United States
Título: | Coordination Failures and the Lender of Last Resort: Was Bagehot Right After All?
Autores: | Rochet,   Jean-Charles; Vives,   Xavier.
Data: | 2006-03-30
Ano: | 2002
Palavras-chave: | Central Bank policy; Interbank market; Prudential regulation; Liquidity ratio; Solvency ratio; Transparency; Prompt corrective action; Orderly failure resolution; Global games; Supermodular games; Financial Economics.
Resumo: | The classical doctrine of the Lender of Last Resort, elaborated by Thornton (1802) and Bagehot (1873), asserts that the Central Bank should lend to "illiquid but solvent" banks under certain conditions. Several authors have argued that this view is now obsolete: when interbank markets are efficient, a solvent bank cannot be illiquid. This paper provides a possible theoretical foundation for rescuing Bagehot's view. Our theory does not rely on the multiplicity of equilibria that arises in classical models of bank runs. We build a model of banks' liquidity crises that possesses a unique Bayesian equilibrium. In this equilibrium, there is a positive probability that a solvent bank cannot find liquidity assistance in the market. We derive policy implications about banking regulation (solvency and liquidity ratios) and interventions of the Lender of Last Resort as well as on the disclosure policy of the Central Bank.
Tipo: | Working or Discussion Paper
Idioma: | Inglês

Identificador:

20559

http://purl.umn.edu/26264

Editor: | AgEcon Search

Relação:

Hamburg Institute of International Economics&gt;Discussion Paper Series

HWWA Discussion Paper 184

Formato:

47

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