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Hauck, A. 
ORCID: 0000-0002-6949-6732, Neyer, U. and Vieten, T.,
2015.
Reestablishing stability and avoiding a credit crunch: comparing different bad bank schemes.
The Quarterly Review of Economics and Finance, 57, pp. 116-128.
ISSN 1062-9769
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Abstract
This paper develops a model to analyze two different bad bank schemes, an outright sale of toxic assets to a state-owned bad bank and a repurchase agreement between the bad bank and the initial bank. For both schemes, we derive a critical transfer payment that induces a bank manager to participate. Participation improves the bank's solvency and enables the bank to grant new loans. Therefore, both schemes can reestablish stability and avoid a credit crunch. An outright sale will be less costly to taxpayers than a repurchase agreement if the transfer payment is sufficiently low.
| Item Type: | Journal article | ||||||
|---|---|---|---|---|---|---|---|
| Publication Title: | The Quarterly Review of Economics and Finance | ||||||
| Creators: | Hauck, A., Neyer, U. and Vieten, T. | ||||||
| Publisher: | Elsevier | ||||||
| Date: | 2015 | ||||||
| Volume: | 57 | ||||||
| ISSN: | 1062-9769 | ||||||
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| Divisions: | Schools > Nottingham Business School | ||||||
| Record created by: | Jonathan Gallacher | ||||||
| Date Added: | 06 Feb 2019 15:15 | ||||||
| Last Modified: | 06 Feb 2019 15:15 | ||||||
| URI: | https://irep.ntu.ac.uk/id/eprint/35776 |
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