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dc.contributor.authorLai, V.S.*
dc.contributor.authorYe, Xiaoxia*
dc.date.accessioned2017-12-22T09:05:17Z
dc.date.available2017-12-22T09:05:17Z
dc.date.issued2017-01-17
dc.identifier.citationLai VS and Y X (2017) How Does the Market View Bank Regulatory Capital Forbearance Policies?en_US
dc.identifier.urihttp://hdl.handle.net/10454/14324
dc.descriptionNoen_US
dc.description.abstractDuring the subprime crisis, the FDIC has shown, once again, laxity in resolving and closing insolvent institutions. Ronn and Verma (1986) call the tolerance level below which a bank closure is triggered the regulatory policy parameter. We derive a model in which we make this parameter stochastic and bank-specific to infer the stock market view of the regulatory capital forbearance value. For 565 U.S. listed banks during 1990 to 2012, the countercyclical forbearance fraction in capital, most substantial in recessions, could represent 17%, on average, of the market valuation of bank equity and could go as high as 100%.en_US
dc.language.isoenen_US
dc.relation.isreferencedbyhttps://dx.doi.org/10.2139/ssrn.2536017en_US
dc.subjectBank regulatory closure rules; Policy parameter; Bank insolvency; Regulatory forbearance; Market-based closure rules; Financial crisesen_US
dc.titleHow Does the Market View Bank Regulatory Capital Forbearance Policies?en_US
dc.status.refereedNoen_US
dc.typeReporten_US
dc.type.versionNo full-text in the repositoryen_US


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