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The Economics of Bank Restructuring: Understanding the Options

Author

Listed:
  • Mr. Kenichi Ueda
  • Augustin Landier

Abstract

Based on a simple framework, this note clarifies the economics behind bank restructuring and evaluates various restructuring options for systemically important banks. The note assumes that the government aims to reduce the probability of a bank’s default and keep the burden on taxpayers at a minimum. The note also acknowledges that the design of any restructuring needs to take into consideration the payoffs and incentives for the various key stakeholders (i.e., shareholders, debt holders, and government).

Suggested Citation

  • Mr. Kenichi Ueda & Augustin Landier, 2009. "The Economics of Bank Restructuring: Understanding the Options," IMF Staff Position Notes 2009/012, International Monetary Fund.
  • Handle: RePEc:imf:imfspn:2009/012
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    Citations

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    Cited by:

    1. Thomas Philippon & Philipp Schnabl, 2013. "Efficient Recapitalization," Journal of Finance, American Finance Association, vol. 68(1), pages 1-42, February.
    2. Stijn Claessens & M. Ayhan Kose & Luc Laeven & Fabián Valencia, 2013. "Understanding Financial Crises: Causes, Consequences, and Policy Responses," CAMA Working Papers 2013-05, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    3. Sudipto Bhattacharya & Kjell G. Nyborg, 2013. "Bank Bailout Menus," Review of Corporate Finance Studies, Oxford University Press, vol. 2(1), pages 29-61.
    4. Miguel Faria-e-Castro & Joseba Martinez & Thomas Philippon, 2017. "Runs versus Lemons: Information Disclosure and Fiscal Capacity," Review of Economic Studies, Oxford University Press, vol. 84(4), pages 1683-1707.
    5. Stijn Claessens & M. Ayhan Kose, 2013. "Financial Crises: Explanations, Types and Implications," CAMA Working Papers 2013-06, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    6. Jean Tirole, 2012. "Overcoming Adverse Selection: How Public Intervention Can Restore Market Functioning," American Economic Review, American Economic Association, vol. 102(1), pages 29-59, February.
    7. Landier, Augustin & Ueda, Kenichi, 2009. "True Taxpayer Burden of Bank Restructuring," TSE Working Papers 10-238, Toulouse School of Economics (TSE), revised 16 Dec 2010.
    8. Jimmy Melo, 2014. "Expectativas cambiarias, selección adversa y liquidez," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(1), pages 27-62, May.
    9. Falko Fecht & Hans Peter Grüner & Manfred Jäger & Frank Westermann, 2009. "Bad Banks: Überzeugt das Konzept der Bundesregierung?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 62(13), pages 03-13, July.
    10. Phillip Swagel, 2009. "The Financial Crisis: An Inside View," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 40(1 (Spring), pages 1-78.
    11. Sabine Winkler, 2017. "Housing, Finance, Policy and the Wider Economy," Journal of Management and Sustainability, Canadian Center of Science and Education, vol. 7(2), pages 45-64, June.
    12. Cristian Gulei Gradinaru, 2011. "How Does The Structure Of Financial Flows Affect The Stability Of The Banking System?," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 1(39), pages 235-238.
    13. Michael Diemer & Uwe Vollmer, 2015. "What makes banking crisis resolution difficult? Lessons from Japan and the Nordic Countries," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 5(2), pages 251-277, December.

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