1.

Record Nr.

UNINA9910462257903321

Autore

Adler Gustavo <1974->

Titolo

Intertwined sovereign and bank solvencies in a model of self-fulfilling crisis [[electronic resource] /] / Gustavo Adler

Pubbl/distr/stampa

Washington, D.C., : International Monetary Fund, c2012

ISBN

1-4755-2939-2

1-4755-4841-9

Descrizione fisica

1 online resource (30 p.)

Collana

IMF working paper ; ; WP/12/178

Soggetti

Financial crises

Banks and banking

Electronic books.

Lingua di pubblicazione

Inglese

Formato

Materiale a stampa

Livello bibliografico

Monografia

Note generali

Description based upon print version of record.

Nota di bibliografia

Includes bibliographical references.

Nota di contenuto

Cover; Contents; 1. Introduction; 2. Model; 2.1 Households; 2.2 Domestic Financial Intermediaries; 2.3 Firms; 2.4 Government; 2.5 A Competitive Equilibrium; 2.6 A Sustainable Debt Equilibrium; 2.7 A Self-Fulfilling Crisis; 3. Discussion; 3.1 Senior Debt Structure; 3.2 Capital Requirements; 3.3 Public Recapitalization; 4. Conclussions; Figures; 1. Equilibria at Time t; 2. Equilibria with Different Levels of Domestic Debt; 3. Probability of Crisis and Effect on Prices, Private Credit and Output; Appendix; References

Sommario/riassunto

Large fiscal financing needs, both in advanced and emerging market economies, have often been met by borrowing heavily from domestic banks. As public debt approached sustainability limits in a number of countries, however, high bank exposure to sovereign risk created a fragile inter-dependence between fiscal and bank solvency. This paper presents a simple model of twin (sovereign and banking) crisis that stresses how this interdependence creates conditions conducive to a self-fulfilling crisis.