Schmidt-Eisenlohr, Tim (2011) Bank bailouts, International Linkages and Cooperation. In: International Institute of Public Finance (IIPF) Annual Conference, 07/08/2011-11/08/2011, University of Michigan, USA.Full text not available from this repository.
Financial institutions are increasingly linked internationally. As a result, financial crisis and government intervention have stronger effects beyond borders. We provide a model of international contagion allowing for bank bailouts. While a social planner trades off tax distortions, liquidation losses and intra- and inter-country income inequality, in the non-cooperative game between governments there are inefficiencies due to externalities, no burden sharing and free-riding. We show that, in absence of cooperation, stronger interbank linkages make government interests diverge, whereas cross-border asset holdings tend to align them. We analyze different forms of cooperation and their effects on global and national welfare.
|Item Type:||Conference or Workshop Item (Paper)|
|Keywords:||Bailout, Contagion, Financial Crisis, International Institutional Arrangements|
|Centre:||Oxford University Centre for Business Taxation|
|Date Deposited:||20 Aug 2012 09:39|
|Last Modified:||23 Oct 2015 14:07|
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