Are Some Banks Too Large To Fail? Myth And Reality
AbstractAt the time of the Continental Illinois National Bank insolvency, bank regulators considered some commercial banks "too large to fail" (TLTF) and were reluctant both to legally fail such banks and to impose pro rata losses on any of the uninsured creditors of these insolvent banks and their parent holding companies. This policy was introduced due to widespread fears that large bank failures would set off a domino effect bringing down other banks and possibly even the macroeconomy as it did during the 1930s. Also, because these banks are considered special in that they provide money and credit to their communities, many feared that their failure could reduce greatly the availability of these services. Copyright 1990 Western Economic Association International.
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Bibliographic InfoArticle provided by Western Economic Association International in its journal Contemporary Economic Policy.
Volume (Year): 8 (1990)
Issue (Month): 4 (October)
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- Kaufman, George G., 2002. "Too big to fail in banking: What remains?," The Quarterly Review of Economics and Finance, Elsevier, vol. 42(3), pages 423-436.
- George G. Kaufman & Steven A. Seelig, 2001. "Post-Resolution Treatment of Depositors At Failed Banks," IMF Working Papers 01/83, International Monetary Fund.
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- Elijah Brewer III & Ann Marie Klingenhagen, 2010. "Be careful what you wish for: the stock market reactions to bailing out large financial institutions: Evidence from the USA," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 18(1), pages 56-69, February.
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- Robert L. Hetzel, 2009. "Should increased regulation of bank risk-taking come from regulators or from the market?," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 161-200.
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