TY - UNPB

T1 - The German Bank Restructuring Act: An Economic Perspective

AU - von Müller, Camillo

PY - 2011

Y1 - 2011

N2 - The paper explores incentives created by the German Bank Restructuring Act for investors holding assets in systemically important banks (SIBs). Its purpose is to examine consequences that follow for risk choices of SIBs, as well as for Germany’s financial system. Applying the analytical model of Stigliz (1990) the study reinforces the view that regulators can induce SIBs to forego risks by curbing promises of systemic support. Adverse consequences result from the fact that the BankRestructuring Act is affecting different groups of SIB-investors heterogeneously. This leads to macro-effects that bear potentials to offset risk reductions achieved on the micro level.

AB - The paper explores incentives created by the German Bank Restructuring Act for investors holding assets in systemically important banks (SIBs). Its purpose is to examine consequences that follow for risk choices of SIBs, as well as for Germany’s financial system. Applying the analytical model of Stigliz (1990) the study reinforces the view that regulators can induce SIBs to forego risks by curbing promises of systemic support. Adverse consequences result from the fact that the BankRestructuring Act is affecting different groups of SIB-investors heterogeneously. This leads to macro-effects that bear potentials to offset risk reductions achieved on the micro level.

KW - Economics

KW - Bailout Guarantees

KW - Banking Act

KW - Bank Reorganization Act

KW - Bank Restructuring Act

KW - Bank Restructuring Fund Act

KW - Financial Markets

KW - Risk

KW - Systemically Important Institutions

M3 - Working papers

T3 - German Working Papers in Law and Economics

BT - The German Bank Restructuring Act: An Economic Perspective

PB - Berkeley Electronic Press

CY - Berkeley

ER -