Collective Moral Hazard, Maturity Mismatch and Systemic Bailouts

By Emmanuel Farhi, Jean Tirole. 2012

1,051 citations recorded by the source corpus.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/19067a1499a314ffa97d70cf5e60c1f51d87378b

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Citations in the corpus

A Theory of Bank Liquidity Requirements (2015, background): “By (19), the banker’s surplus in this case is given by:”
The Maturity Rat Race (2013, background): “Farhi and Tirole (2009) show how excessive maturity mismatch emerges through a collective moral hazard that anticipates untargeted ex-post monetary policy intervention during systemic crises. Unlike their paper, our model shows that excessive maturity mismatch may arise even in the absence of an ant”
A Pigovian Approach to Liquidity Regulation (2011, background): “(3) Notice that the short-term funding decision x of any bank of class θ determines, via ε(x, θ), the vulnerability of that very bank to a systemic crisis, and also, via c(X), the likelihood and/or costs of a systemic crisis to all other banks.”
Optimal Interventions in Markets with Adverse Selection (2012, neutral): “We do not address the issue of outstanding long term debt and we refer the reader to Philippon and Schnabl (2009) for a model where debt overhang is the main friction.”
The Flight Home Effect: Evidence from the Syndicated Loan Market During Financial Crises (2012, background): “…exposure to domestic loans especially to the government and government-owned enterprises while cutting back on foreign loans, banks may increase their importance to the domestic real economy and thereby increase the probability of being bailed out if needed (as in Farhi and Tirole, 2009).”
QE 1 vs. 2 vs. 3. . . : A Framework for Analyzing Large-Scale Asset Purchases as a Monetary Policy Tool (2013, background): “Accordingly, there is no 10We abstract from moral hazard considerations emphasized, for example, by Chari and Kehoe (2010) and Farhi and Tirole (2012).”
Macroeconomics with Financial Frictions: A Survey (2012, background): “This increase in allocation efficiency outweighs the effect of lower aggregate investment and the bubbles are possible even if the economy is dynamically efficient, as long as there is a borrowing friction.21 21See also Farhi and Tirole (2011).”
Real interest rates, leverage, and bank risk-taking (2014, background): “More recently, Farhi and Tirole [29] and Diamond and Rajan [27] have examined the role of " macro bailouts " and collective moral hazard on banks' liquidity decisions.”
Bailouts and Financial Fragility (2016, neutral): “In a similar vein, Farhi and Tirole (2012) study a setting in which the policy maker would like to commit to not lower interest rates in the event of a crisis (see their Proposition 1). In the absence of commitment, the anticipation of this type of bailout distorts banks’ incentives and introduces a”
Who Borrows from the Lender of Last Resort (2016, background): “Farhi and Tirole (2012) show that the government’s inability to commit not to bail out banks during a systemic crisis generates an incentive for banks to excessively invest in assets that decline during systemic crises.”
Mortgage Modification and Strategic Behavior: Evidence from a Legal Settlement with Countrywide (2014, neutral): “19 See Tables A.3 and A.4 in the online Appendix.”
Wholesale Banking and Bank Runs in Macroeconomic Modeling of Financial Crises (2016, methodology): “Finally, from equation (26) we obtain an expression for the franchise value per unit of net worth V r t nt = Et{Ωt+1[(R kt+1 −Rt+1)φt +Rt+1]} (28)”