Hidden Bibliographic Details
| Other authors / contributors: | IMF-Singapore Regional Training Institute.
International Monetary Fund, issuing body.
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| ISBN: | 9781498387361
1498387365
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| Notes: | "IMF - Singapore Regional Training Institute"--Page 2 of pdf.
"July 2014"--Page 2 of pdf.
Includes bibliographical references (pages 31-36).
Online resource; title from pdf title page (IMF.org Web site, viewed July 8, 2014).
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| Summary: | "The global financial crisis highlighted that the financial system can be most vulnerable when it seems most stable. This paper models non-linear dynamics in banking. Small shocks can lead from an equilibrium with few bank defaults straight to a full freeze. The mechanism is based on amplification between adverse selection on banks' funding market and moral hazard in bank monitoring. Our results imply trade-offs between regulators' micrssrudential desire to shield individual weak banks and the macroprudential consequences of doing so. Moreover, limiting bank reliance on wholesale funding always reduces systemic risk, but limiting the correlation between bank portfolios does not"--Abstract.
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