Too big to fail : origins, consequences, and outlook
AbstractThe policy of too big to fail arose in part from pressures created by the lack of satisfactory bankruptcy arrangements for banks. It prevented market forces from closing banks and protected all uninsured depositors of large banks from loss in the event of failure. The consequent risk-taking behavior of banks produced the systemic instability in banking that the policy was designed to prevent. It is debatable how the Deposit Insurance Reform Act of 1991 will affect the timing of bank closures, the risk-taking behavior of banks, and the contraction of the banking industry.
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Bibliographic InfoArticle provided by Federal Reserve Bank of Richmond in its journal Economic Review.
Volume (Year): (1991)
Issue (Month): Nov ()
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