Financial crises are recurring phenomena that result in the financial distress of systemically important banks, making it imperative to understand how to best respond to such crises and their consequences. Two policy responses became prominent for dealing with these distressed institutions since the last Global Financial Crisis: bailouts and bail-ins. The main questions surrounding these responses touch everyone: Are bailouts or bail-ins good for the financial system and the real economy? Is it essential to save distressed financial institutions by putting taxpayer money at risk in bailouts, or is it better to use private money in bail-ins instead? Are there better options, such as first lines of defense that help prevent such distress in the first place? Can countercyclical prudential and monetary policies lessen the likelihood and severity of the financial crises that often bring about this distress? Through careful analysis, authors Berger and Roman review and critically assess the extant theoretical and empirical research on many resolution approaches and tools. Placing special emphasis on lessons learned from one of the biggest bailouts of all time, the Troubled Asset Relief Program (TARP), while also reviewing other programs and tools, TARP and Other Bank Bailouts and Bail-Ins around the World sheds light on how best to protect the financial system on Wall Street and the real economy on Main Street.
1. Chapter 1. Introduction to bank bailouts, bail-ins and related topics covered in the book - p. 5 2. Chapter 2. Conditions that generally bring about bank bailouts, bail-ins, and other resolution methods - p. 43 3. Chapter 3. Descriptions of TARP, other bank bailouts and bail-ins, and other resolution approaches in the US and around the world - p. 57 4. Chapter 4. Theoretical background on bank bailouts, bail-ins, and other resolution approaches - p. 145 5. Part II. Empirical research on TARP - p. 171 6. Part 2 Empirical research on TARP - p. 172 7. Chapter 5. Methodologies used in most of the TARP empirical studies - p. 177 8. Chapter 6. Determinants of applying for and receiving TARP funds and exiting early from the program - p. 187 9. Chapter 7. Effects of TARP on recipient banks' valuations - p. 197 10. Chapter 8. Effects of TARP on market discipline - p. 209 11. Chapter 9. Effects of TARP on bank leverage risk - p. 213 12. Chapter 10. Effects of TARP on bank competition - p. 217 13. Chapter 11. Effects of TARP on bank credit supply - p. 223 14. Chapter 12. Effects of TARP on bank portfolio risk - p. 233 15. Chapter 13. Effects of TARP on recipient banks' credit customers - p. 239 16. Chapter 14. Effects of TARP on the real economy - p. 243 17. Chapter 15. Effects of TARP on systemic risk - p. 249 18. Part III. Empirical evidence on bank bailouts other than TARP, bail-ins, and other resolution approaches - p. 256 19. Part 3 Empirical evidence on bank bailouts other than TARP, bail-ins, and other resolution approaches - p. 257 20. Chapter 16. Empirical research on bailouts other than TARP - p. 261 21. Chapter 17. Empirical research on bail-ins - p. 275 22. Chapter 18. Empirical research on other resolution approaches - p. 289 23. Part IV. First lines of defense to help avoid bailouts, bail-ins, and other resolutions - p. 302 24. Part 4 First lines of defense to help avoid bailouts, bail-ins, and other resolutions - p. 303 25. Chapter 19. Mechanisms for the first lines of defense - p. 307 26. Chapter 20. Capital requirements - p. 313 27. Chapter 21. Liquidity requirements - p. 331 28. Chapter 22. Stress tests - p. 343 29. Chapter 23. Prudential regulatory activity restrictions - p. 353 30. Chapter 24. Prudential supervision - p. 363 31. Chapter 25. Deposit insurance - p. 373 32. Chapter 26. Direct government ownership of banks - p. 385 33. Part V. Looking toward the future - p. 397 34. Part 5 Looking toward the future - p. 399 35. Chapter 27. Social costs and benefits - p. 403 36. Chapter 28. Implications for bank policymakers and bank managers - p. 423 37. Chapter 29. Open research questions to be addressed by future research - p. 429 38. Author Index - p. 435 39. Subject Index - p. 445
Financial crises are recurring phenomena that result in the financial distress of systemically important banks, making it imperative to understand how to best respond to such crises and their consequences. Two policy responses became prominent for dealing with these distressed institutions since the last Global Financial Crisis: bailouts and bail-ins. The main questions surrounding these responses touch everyone: Are bailouts or bail-ins good for the financial system and the real economy? Is it essential to save distressed financial institutions by putting taxpayer money at risk in bailouts, or is it better to use private money in bail-ins instead? Are there better options, such as first lines of defense that help prevent such distress in the first place? Can countercyclical prudential and monetary policies lessen the likelihood and severity of the financial crises that often bring about this distress? Through careful analysis, authors Berger and Roman review and critically assess the extant theoretical and empirical research on many resolution approaches and tools. Placing special emphasis on lessons learned from one of the biggest bailouts of all time, the Troubled Asset Relief Program (TARP), while also reviewing other programs and tools, TARP and Other Bank Bailouts and Bail-Ins around the World sheds light on how best to protect the financial system on Wall Street and the real economy on Main Street.
1. Chapter 1. Introduction to bank bailouts, bail-ins and related topics covered in the book - p. 5 2. Chapter 2. Conditions that generally bring about bank bailouts, bail-ins, and other resolution methods - p. 43 3. Chapter 3. Descriptions of TARP, other bank bailouts and bail-ins, and other resolution approaches in the US and around the world - p. 57 4. Chapter 4. Theoretical background on bank bailouts, bail-ins, and other resolution approaches - p. 145 5. Part II. Empirical research on TARP - p. 171 6. Part 2 Empirical research on TARP - p. 172 7. Chapter 5. Methodologies used in most of the TARP empirical studies - p. 177 8. Chapter 6. Determinants of applying for and receiving TARP funds and exiting early from the program - p. 187 9. Chapter 7. Effects of TARP on recipient banks' valuations - p. 197 10. Chapter 8. Effects of TARP on market discipline - p. 209 11. Chapter 9. Effects of TARP on bank leverage risk - p. 213 12. Chapter 10. Effects of TARP on bank competition - p. 217 13. Chapter 11. Effects of TARP on bank credit supply - p. 223 14. Chapter 12. Effects of TARP on bank portfolio risk - p. 233 15. Chapter 13. Effects of TARP on recipient banks' credit customers - p. 239 16. Chapter 14. Effects of TARP on the real economy - p. 243 17. Chapter 15. Effects of TARP on systemic risk - p. 249 18. Part III. Empirical evidence on bank bailouts other than TARP, bail-ins, and other resolution approaches - p. 256 19. Part 3 Empirical evidence on bank bailouts other than TARP, bail-ins, and other resolution approaches - p. 257 20. Chapter 16. Empirical research on bailouts other than TARP - p. 261 21. Chapter 17. Empirical research on bail-ins - p. 275 22. Chapter 18. Empirical research on other resolution approaches - p. 289 23. Part IV. First lines of defense to help avoid bailouts, bail-ins, and other resolutions - p. 302 24. Part 4 First lines of defense to help avoid bailouts, bail-ins, and other resolutions - p. 303 25. Chapter 19. Mechanisms for the first lines of defense - p. 307 26. Chapter 20. Capital requirements - p. 313 27. Chapter 21. Liquidity requirements - p. 331 28. Chapter 22. Stress tests - p. 343 29. Chapter 23. Prudential regulatory activity restrictions - p. 353 30. Chapter 24. Prudential supervision - p. 363 31. Chapter 25. Deposit insurance - p. 373 32. Chapter 26. Direct government ownership of banks - p. 385 33. Part V. Looking toward the future - p. 397 34. Part 5 Looking toward the future - p. 399 35. Chapter 27. Social costs and benefits - p. 403 36. Chapter 28. Implications for bank policymakers and bank managers - p. 423 37. Chapter 29. Open research questions to be addressed by future research - p. 429 38. Author Index - p. 435 39. Subject Index - p. 445
