05320oam 22012494 450 991082745400332120240402051842.01-4623-0026-X1-282-84434-21-4527-7023-91-4518-7380-89786612844348(CKB)3170000000055377(SSID)ssj0000940759(PQKBManifestationID)11499073(PQKBTitleCode)TC0000940759(PQKBWorkID)10956005(PQKB)11478044(OCoLC)680613667(MiAaPQ)EBC1608857(IMF)WPIEE2009233(EXLCZ)99317000000005537720020129d2009 uf 0engurcn|||||||||txtccrExcessive Lending, Leverage, and Risk-Taking in the Presence of Bailout Expectations /Andréas Georgiou1st ed.Washington, D.C. :International Monetary Fund,2009.25 p. illIMF Working Papers"October 2009."1-4519-1798-8 Includes bibliographical references.Intro -- Contents -- I. Introduction -- II. The Analytical Framework -- A. The Basic Model -- B. Different Sources of Finance -- C. Choice of Project Riskiness -- D. Change in the Cost of Loanable Funds -- E. Changes in the Probability Distribution Function of the Debt-Financed Project -- III. Some Thoughts on Policy Implications -- IV. Conclusion -- Appendix -- References.The financial crisis that began in 2007 has brought to the fore the issues of excesses in lending, leverage, and risk-taking as some of the fundamental causes of this crisis. At the same time, in dealing with the financial crisis there have been large scale interventions by governments, often referred to as bailouts of the lenders. This paper presents a framework where rational economic agents engage in ex ante excessive lending, borrowing, and risk-taking if creditors assign a positive probability to being bailed out. The paper also offers some thoughts on policy implications. It argues that it would be most productive for the long run if lending institutions were not bailed out. If the continuing existence of an institution was deemed essential, assistance should take the form of capital injections that dilute the equity of existing owners.IMF Working Papers; Working Paper ;No. 2009/233Financial crisesEconometric modelsEconomic policyMathematical modelsFinancial riskCapital marketGlobal Financial Crisis, 2008-2009Banks and BankingimfFinancial Risk ManagementimfMoney and Monetary PolicyimfIndustries: Financial ServicesimfBanksimfDepository InstitutionsimfMicro Finance InstitutionsimfMortgagesimfFinancial CrisesimfMonetary Policy, Central Banking, and the Supply of Money and Credit: GeneralimfFinancing PolicyimfFinancial Risk and Risk ManagementimfCapital and Ownership StructureimfValue of FirmsimfGoodwillimfFinanceimfEconomic & financial crises & disastersimfMonetary economicsimfFinancial services law & regulationimfFinancial crisesimfCreditimfLoansimfProject loansimfCredit riskimfFinancial risk managementimfFinancial crisesEconometric models.Economic policyMathematical models.Financial risk.Capital market.Global Financial Crisis, 2008-2009.Banks and BankingFinancial Risk ManagementMoney and Monetary PolicyIndustries: Financial ServicesBanksDepository InstitutionsMicro Finance InstitutionsMortgagesFinancial CrisesMonetary Policy, Central Banking, and the Supply of Money and Credit: GeneralFinancing PolicyFinancial Risk and Risk ManagementCapital and Ownership StructureValue of FirmsGoodwillFinanceEconomic & financial crises & disastersMonetary economicsFinancial services law & regulationFinancial crisesCreditLoansProject loansCredit riskFinancial risk management338.5;338.542Georgiou Andréas1698223International Monetary Fund.Statistics Dept.DcWaIMFBOOK9910827454003321Excessive Lending, Leverage, and Risk-Taking in the Presence of Bailout Expectations4079535UNINA