Bank Bailouts: Moral Hazard vs. Value Effect

By T. Cordella, E. L. Yeyati. 2003

263 citations recorded by the source corpus.

Subfields: Finance

View Paper: https://www.semanticscholar.org/paper/b06bd9f072410f8cc56659ff67033c43b02d86a5

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Citations in the corpus

Safer Ratios, Riskier Portfolios: Banks’ Response to Government Aid (2014, unknown): “hazard, resulting in a lower equilibrium level of risk (Goodhart and Huang (1999), Cordella and Yeyati (2003)).”
Did TARP Banks Get Competitive Advantages? (2015, background): “First, under the charter-value/quiet-life channel (Hicks (1935), Keeley (1990), and Cordella and Yeyati (2003)), bailouts may increase charter values and/or allow for “quiet lives,” decreasing incentives for aggressive behavior and leading to lower market shares.7 Second, there may be a stigma…”
Liquidity, Risk Taking, and the Lender of Last Resort (2005, background): “Substituting (3) and (4) into this expression, it follows that when the LLR observes the bad signal s0 it will support the bank if v ≤ v0 ≡ cp(1− q) (1− p)q , (5)”
The End of Market Discipline? Investor Expectations of Implicit State Guarantees (2013, background): “However, the evidence is far from unambiguous and some studies find that guarantees reduce risk taking (Kacperczyk and Schnabl 2011; Gropp and Vesala 2004; Cordella and Yeyati 2003), possibly resulting from increased charter values (Bliss 2001 and 2004; Keeley 1990) or greater regulatory oversight.”
Real interest rates, leverage, and bank risk-taking (2014, background): “8 For a model in the same spirit but where banks choose among portfolios with different risk/return characteristics, see Cordella and Levy-Yeyati [22].”
Did Saving Wall Street Really Save Main Street? The Real Effects of TARP on Local Economic Conditions (2015, background): “First, under the charter-value/quiet-life channel (Hicks (1935), Keeley (1990), and Cordella and Yeyati (2003)), the extra capital from the bailout may increase charter value 1834 Journal of Financial and Quantitative Analysis and/or allow for a “quiet life,” decreasing incentives for aggressive…”