This paper shows that Central bank, by announcing and committing ex-ante to a bailout policy that is contingent on the realization of certain states of nature(for example on the occurrence of an adverse macroeconomic shock), creates a risk-reducing "value effect" that more than outweighs the moral hazard component of such a policy.
Did you find this white paper useful?
27 out of 50 users found this white paper useful
Related white papers
Case Study: Allied Irish Bank (AIB)
AIB Group, with assets of almost ?81 billion, is Ireland's leading banking and financial services organization. It employs more than 24,000 people in more than 800 offices around the world....
IT Consulting to Define 360° IT Roadmap for Leading Private Bank
MindTree Consulting leveraged its expertise in the banking domain and its consulting capabilities to prepare a detailed IT roadmap for a large Indian bank. The client wanted to maximize its...
Wholesale Branch of South Africa's Largest Bank Moves Successfully From Homegrown Appraisal System to Halogen
Standard Bank Group is a global bank with African roots. The Bank wanted the new solution to mirror the format of the old performance appraisal process, which included past objectives...
New Branch-Management Technology Helps Citizens Bank Sharpen Customer Focus
With more than 1,500 branches and counting, the Providence, Rhode Island financial services company has thrived precisely because of its commitment to face-to-face customer relationships. Citizen Bank's old branch computing...
Guangdong Development Bank Strengthens Financial Management
Guangdong Development Bank (GDB) was established in September 1998 with the approval of the State Council and The People's Bank of China. The bank wanted to establish a unified finance...
Local Bank Improves Customer Service and Competitive Advantage With Upgrade
American National Bank of Fremont has grown from U.S.$30 million in assets in 2000 to $150 million in 2007. To continue its growth, the bank chose to focus on personalized...
Seamless Integration of HVB Romania and BCIT Achieved in Record Time
In order to further expand in Romania, the former HVB Group - now part of UniCredit Group - acquired Banca Comerciala Ion Tiriac (BCIT) and subsequently merged it with its...
