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How Big a Problem is Too Big to Fail?

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  • Frederic S. Mishkin

Abstract

This review essay examines whether too-big-to-fail is as serious a problem as Gary Stern and Ron Feldman contend. This essay argues that Stern and Feldman overstate the importance of the too-big-to-fail problem and do not give enough credit to the FDICIA legislation of 1991 for improving bank regulation and supervision. However, this criticism of the Stern and Feldman book does not detract from many of its messages. Even if the too-big-to-fail problem is not as serious as they contend, the policies they outline can make it less likely that a banking crisis will occur even if driven by other factors.

Suggested Citation

  • Frederic S. Mishkin, 2005. "How Big a Problem is Too Big to Fail?," NBER Working Papers 11814, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:11814
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    References listed on IDEAS

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    Cited by:

    1. Kersten Kellermann, 2011. "Too big to fail: a thorn in the side of free markets," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 38(3), pages 331-349, July.
    2. Mayes, David G. & Nieto, María J. & Wall, Larry, 2008. "Multiple safety net regulators and agency problems in the EU: Is Prompt Corrective Action partly the solution?," Journal of Financial Stability, Elsevier, vol. 4(3), pages 232-257, September.
    3. Franz R. Hahn, 2008. "The International Banking Crisis and the Role of the Financial Supervision and Financial Innovations," WIFO Monatsberichte (monthly reports), WIFO, vol. 81(8), pages 593-606, August.
    4. Jean-Charles Rochet, 2009. "Regulating Systemic Institutions," Finnish Economic Papers, Finnish Economic Association, vol. 22(2), pages 35-46, Autumn.
    5. Mayes, David G. & Nieto, María J. & Wall, Larry, 2007. "Multiple safety net regulators and agency problems in the EU : is Prompt Corrective Action a partial solution," Research Discussion Papers 7/2007, Bank of Finland.

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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