Too Many to Fail? Evidence of Regulatory Forbearance When the Banking Sector Is Weak
Year: 2009
Type: article
Abstract: This article studies bank failures in twenty-one emerging market countries in the 1990s. By using a competing risk hazard model for bank survival, we show that a government is less likely to take over or close a failing bank if the banking system is weak. This Too-Many-to-Fail effect is robust to controlling for macroeconomic factors, financial crises, the Too-Big-to-Fail effect, domestic financial development, and concerns due to systemic risk and information spillovers. The article also shows that the Too-Many-to-Fail effect is stronger for larger banks and when there is a large government budget deficit.
Source: Review of Financial Studies
DOI: 10.1093/rfs/hhp039
Authors: Craig O. Brown, I. Serdar Dinç
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2041414737