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You are looking at 1 - 10 of 17 items for :

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Cover IMF Working Papers
Post-Resolution Treatment of Depositors At Failed Banks
Implications for the Severity of Banking Crises, Systemic Risk, and too-Big-To-Fail
Mr. George G. Kaufman and Mr. Steven A. Seelig

, two at the time an insolvent bank is resolved and placed in receivership and two afterwards. The two sources of post-resolution losses arise from delayed payment of depositor claims. The effective freezing of some or all of the deposits by the deposit insurance agency until reliable data are available on what deposits and depositors are protected and/or the proceeds from the sale of bank assets are received has two conflicting effects. On the one hand, fear of delayed payment increases depositor monitoring and discipline. On the other hand, fear of delayed payment

Keywords:
WP; uninsured depositor; depositor monitoring; unprotected depositor; insurance agency; access delay time.; depositor discipline; depositor pressure; Peruvian depositor; way depositor
Cover IMF Working Papers
Post-Resolution Treatment of Depositors At Failed Banks: Implications for the Severity of Banking Crises, Systemic Risk, and too-Big-To-Fail
Mr. George G. Kaufman and Mr. Steven A. Seelig
Losses may accrue to depositors at insolvent banks both at and after the time of official resolution. Losses at resolution occur because of poor closure rules and regulatory forbearance. Losses after resolution occur if depositors' access to their claims is delayed or "frozen." While the sources and implications of losses at resolution have been analyzed previously, the sources and implications of losses after resolution have received little attention. This paper examines the causes of delayed depositors' access to their funds at resolved banks, describes how the FDIC provides immediate access, reports on a special survey of access practices in other countries, and analyzes the costs and benefits of delayed access in terms of both the effects on market discipline and depositor pressure to protect all deposits.
Keywords:
WP; uninsured depositor; depositor monitoring; unprotected depositor; insurance agency; access delay time.; depositor discipline; depositor pressure; deposit insurance; bank failure; banking crisis; systemic risk; delay time; bailout pressure; depositor access; depositor ownership; Distressed institutions; Bank solvency; Bank deposits; Bank resolution
Cover IMF Working Papers
Front Matter
Mr. George G. Kaufman and Mr. Steven A. Seelig
Keywords:
WP; uninsured depositor; depositor monitoring; unprotected depositor; insurance agency; access delay time.; depositor discipline; depositor pressure
Cover IMF Working Papers
Dynamic Depositor Discipline in U.S. Banks
Kathleen McDill and Andrea M. Maechler
This paper investigates the presence of depositor discipline in the U.S. banking sector. We test whether depositors penalize (discipline) banks for poor performance by withdrawing their uninsured deposits. While focusing on the movements in uninsured deposits, we also account for the possibility that banks may be forced to pay a risk premium in the form of higher interest rates to induce depositors not to withdraw their uninsured deposits. Our results support the existence of depositor discipline: a weak bank may not necessarily be able to stop a deposit drain by raising its uninsured deposit interest rates.
Keywords:
WP; bank; uninsured deposit; interest rate; depositor; Deposit Insurance; Market Discipline; Banking System; depositor discipline; risk profile; bank fundamentals; demand curve; fundamentals change; equity level; Deposit rates; Bank deposits; Special purpose vehicle; Distressed institutions
Cover IMF Working Papers
Wholesale Bank Funding, Capital Requirements and Credit Rationing
Mr. Itai Agur
This paper analyzes how different types of bank funding affect the extent to which banks ration credit to borrowers, and the impact that capital requirements have on that rationing. Using an extension of the standard Stiglitz-Weiss model of credit rationing, unsecured wholesale finance is shown to amplify the credit market impact of capital requirements as compared to funding by retail depositors. Unsecured finance surged in the pre-crisis years, but is increasingly replaced by secured funding. The collateralization of wholesale funding is found to expand the extent of credit rationing.
Keywords:
WP; credit rationing; financial crisis
Cover IMF Working Papers
Modis: A Market-Oriented Deposit Insurance Scheme
Ms. Edda Zoli, Danyang Xie, and Reza Vaez-Zadeh
This paper argues that an optimal deposit insurance scheme would allow the level of insurance coverage to be determined by the market. Based on this principle, the paper proposes an insurance scheme that minimizes distortions and embodies fairness and credibility, two essential characteristics of a viable and effective deposit insurance scheme. Using a simple model for the determination of the optimal level of insurance coverage, it is shown that the optimal coverage is higher for developing compared to developed countries; a condition that is broadly satisfied by prevailing deposit insurance practices around the world.
Keywords:
WP; interest rate; insurance system; insured deposit; deposit insurance; market-oriented approach; insurance scheme; guarantee scheme; insurance agency; deposit liability; protection arrangement; Insurance; Moral hazard; Bank deposits; Distressed institutions; Global; Middle East; Western Hemisphere; Europe; Africa
Cover IMF Working Papers
Deposit Insurance Regulatory forbearance and Economic Growth: Implications for the Japanese Banking Crisis
Kenneth Kletzer and Mr. Robert Dekle
An endogenous growth model with financial intermediation demonstrates how deposit insurance and prudential regulatory forbearance lead to banking crises and growth declines. The model assumptions are based on features of the Japanese financial system and regulation. The model demonstrates how banking and growth crises can evolve under perfect foresight. The dynamics for economic aggregates and asset prices predicted by the model are shown to be generally consistent with the experience of the Japanese economy and financial system through the 1990s. We also test our maintained hypothesis of rational expectations using asset price data for Japan over the 1980s and 1990s.
Keywords:
WP; rate of interest; capital stock; banking sector; Japanese economy; banking crises; economic growth; insurance liability; bank equity ratio; withdrawal demand; bank dividend; bank financing; Deposit insurance; Stocks; Loans; Bank credit; East Asia
Cover IMF Working Papers
Responding to Banking Crises: Lessons From Cross-Country Evidence
Ms. Enrica Detragiache and Giang Ho
A common legacy of banking crises is a large increase in government debt, as fiscal resources are used to shore up the banking system. Do crisis response strategies that commit more fiscal resources lower the economic costs of crises? Based on evidence from a sample of 40 banking crises we find that the answer is negative. In fact, policies that are riskier for the government budget are associated with worse, not better, post-crisis performance. We also show that parliamentary political systems are more prone to adopt bank rescue measures that are costly for the government budget. We take advantage of this relationship to instrument the policy response, thereby addressing concerns of joint endogeneity. We find no evidence that endogeneity is a source of bias.
Keywords:
WP; Policy index; response index; Policy response index; resolution policy; Policy response; Banking crises; banking crisis policies; banking crisis cost; bank support policy; blanket government guarantee; bank-support policy; crisis response policy; countercyclical policy tool; output growth; crisis resolution policy; policy measure; crisis performance; bank rescue policy; Crisis management; Crisis resolution; Global
Cover IMF Working Papers
Is there a Role for Funding in Explaining Recent U.S. Banks' Failures?
Pierluigi Bologna
This paper tests the role of different banks' liquidity funding structures in explaining the banks' failures, which occurred in the United States between 2007 and 2009. The results highlight that funding is indeed a significant factor in explaining banks' probability of default. By confirming the role of funding as the driver of banking crisis, the paper also recognizes that the new liquidity framework proposed by the Basel Committee on Banking Supervision appears to have the features to strenghten banks' liquidity conditions and improve financial stability. Its correct implementation together with closer supervision of banks' liquidity and funding conditions appear, however, the determinant for such improvements to be achieved.
Keywords:
WP; bank; deposit; banks' default; Banks; Default; Crises; Liquidity; Funding; Brokered Desposits; Liquidity Regulation; Deposit Insurance; United States; bank si; liquidity condition; banks' status; funding mix; defaulted bank; management action; risk profile; asset size; macroeconomic variable; Nonperforming loans; Capital adequacy requirements; Distressed institutions; Global
Cover IMF Working Papers
Wholesale Bank Funding, Capital Requirements and Credit Rationing1
Mr. Itai Agur

bank risk taking incentives, because it reduces depositor monitoring: when depositors have less at stake they invest less in monitoring bank activities, which leads to moral hazard on the bank’s part. In our model there is no monitoring decision, and depositors always know as much (or, rather, as little) about the bank’s borrowers as the bank itself does. Proposition 4 The larger the share of insured deposits, the smaller the impact of capital requirements on the degree of credit rationing : ∂ 2 Ω ∂ ( Q ¯ / X ) ∂ α < 0 . Proof . In the appendix. This result

Keywords:
WP; credit rationing; financial crisis; bank risk; B. bank liability; risk profile; bank activity; financial crisis bank