Financial Restructuring and Resolution of Banks - HEC Paris - École des hautes études commerciales de Paris Access content directly
Preprints, Working Papers, ... Year : 2018

Financial Restructuring and Resolution of Banks


How do resolution frameworks affect the private restructuring of distressed banks? We model a distressed bank’s shareholders and creditors negotiating a restructuring given asymmetric information about asset quality and externalities onto the government. This yields negotiation delays used to signal asset quality. We find that strict bail-in rules increase delays by worsening informational frictions and reducing bargaining surplus. We characterize optimal bail-in rules for the government. We then consider the government’s possible involvement in negotiations. We find this can lead to shorter or longer delays. Notably, the government may gin from committing not to partake in negotiations.
No file

Dates and versions

hal-01933873 , version 1 (24-11-2018)





Jean-Edouard Colliard, Denis Gromb. Financial Restructuring and Resolution of Banks. 2018. ⟨hal-01933873⟩
59 View
0 Download



Gmail Mastodon Facebook X LinkedIn More