Last Bank Standing: What Do I Gain if You Fail?

By Enrico C. Perotti, Javier Suárez. 2002

209 citations recorded by the source corpus.

View Paper: https://www.semanticscholar.org/paper/d7ca94b9b18b637ec5726c34fc436ab830110b57

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Citations in the corpus

Does Competition Reduce the Risk of Bank Failure (2010, unknown): “Thus, there is no need to consider situations, like those in Perotti and Suarez(2002), where some banks may survive while others fail, so the surviving banks may increase their market power in the following periods.”
Capital Requirements, Market Power and Risk-Taking in Banking (2004, methodology): “(13) The left hand side of this expression is the present value of the deviation to the prudent strategy at any date t, while the right hand side is the value of the bank in the gambling equilibrium.”
CHAPTER 14 – Competition and Regulation in Banking (2008, background): “An alternative regulatory instrument to create charter values and solve the trade-off between competition and stability is analyzed by Perotti and Suarez (2002) in a dynamic model where two banks compete on the deposit market and invest in either a prudent or a speculative asset. As in Hellman et al”
Too many to fail—An analysis of time-inconsistency in bank closure policies (2007, unknown): “Perotti and Suarez (2002) consider a dynamic model where selling failed banks to surviving banks (reducing competition) increases the charter-value of surviving banks and gives banks ex-ante incentives to stay solvent.”
Bank capital management: International evidence (2015, background): “The quintile results on bank profitability indicate that profitable banks can adjust more quickly during crisis periods (0.129***), possibly because they benefit more from the “last bank standing” effect of surviving incumbent banks (Perotti and Suarez (2002)).”
Cash-in-the-market pricing and optimal resolution of bank failures (2007, unknown): “Perotti and Suarez (2002) consider a dynamic model where selling failed banks to surviving banks (reducing competition) increases the charter value of surviving banks and gives banks ex-ante incentives to stay solvent.”
Bank Competition and Financial Stability : Friends or Foes? (2008, background): “Saez and Shi (2004), on the other hand, show that a limited number of banks can cooperate, act strategically and help a bank with temporary liquidity shortages.”
Where the Risks Lie: A Survey on Systemic Risk (2017, unknown): “An important one is the “last bank standing effect” of Perotti and Suarez (2002): if a bank does not engage in herding, it is in a good position to buy other banks’ assets at fire-sale prices when they are simultaneously hit by a negative shock.”