Optimal lender of last resort policy in different financial systems
- In a framework closely related to Diamond and Rajan (2001) we characterize different financial systems and analyze the welfare implications of different LOLR-policies in these financial systems. We show that in a bank-dominated financial system it is less likely that a LOLR-policy that follows the Bagehot rules is preferable. In financial systems with rather illiquid assets a discretionary individual liquidity assistance might be welfare improving, while in market-based financial systems, with rather liquid assets in the banks' balance sheets, emergency liquidity assistance provided freely to the market at a penalty rate is likely to be efficient. Thus, a "one size fits all"-approach that does not take the differences of financial systems into account is misguiding. JEL - Klassifikation: D52 , E44 , G21 , E52 , E58
Author: | Falko FechtORCiDGND, Marcel TyrellGND |
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URN: | urn:nbn:de:hebis:30-17772 |
URL: | https://www.bundesbank.de/Redaktion/EN/Downloads/Publications/Discussion_Paper_1/2004/2004_12_16_dkp_39.pdf |
ISBN: | 3–86558–034–3 |
Parent Title (German): | Deutsche Bundesbank: [Discussion paper / 1] Discussion paper : Ser. 1, Economic studies ; No. 2004,39 |
Document Type: | Working Paper |
Language: | English |
Year of Completion: | 2004 |
Year of first Publication: | 2004 |
Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
Release Date: | 2005/10/06 |
Tag: | Lender of Last Resort / Finanzmarkt / Wirtschaftspolitische Wirkungsanalyse Comparing Financial Systems; Financial Crises; Lender of Last Resort |
Page Number: | 48 |
Source: | Discussion paper Series 1 / Volkswirtschaftliches Forschungszentrum der Deutschen Bundesbank ; 2004,39 |
HeBIS-PPN: | 222205350 |
Institutes: | Wirtschaftswissenschaften / Wirtschaftswissenschaften |
Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
Licence (German): | Deutsches Urheberrecht |