Bank bailouts, International Linkages and Cooperation

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.

Abstract

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
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation
Date Deposited: 20 Aug 2012 09:39
Last Modified: 23 Oct 2015 14:07
URI: http://eureka.sbs.ox.ac.uk/id/eprint/4088

Actions (login required)

Edit View Edit View