Skip to main content
About HEC About HEC
Summer School Summer School
Faculty & Research Faculty & Research
Master’s programs Master’s programs
Bachelor Programs Bachelor Programs
MBA Programs MBA Programs
PhD Program PhD Program
Executive Education Executive Education
HEC Online HEC Online
About HEC
Overview Overview
Who
We Are
Who
We Are
Egalité des chances Egalité des chances
HEC Talents HEC Talents
International International
Campus
Life
Campus
Life
Sustainability Sustainability
Diversity
& Inclusion
Diversity
& Inclusion
Stories Stories
The HEC
Foundation
The HEC
Foundation
Summer School
Youth Programs Youth Programs
Summer programs Summer programs
Online Programs Online Programs
Faculty & Research
Overview Overview
Faculty Directory Faculty Directory
Departments Departments
Centers Centers
Chairs Chairs
Grants Grants
Knowledge@HEC Knowledge@HEC
Master’s programs
Master in
Management
Master in
Management
Master's
Programs
Master's
Programs
Double Degree
Programs
Double Degree
Programs
Bachelor
Programs
Bachelor
Programs
Summer
Programs
Summer
Programs
Exchange
students
Exchange
students
Student
Life
Student
Life
Our
Difference
Our
Difference
Bachelor Programs
Overview Overview
Course content Course content
Admissions Admissions
Fees and Financing Fees and Financing
MBA Programs
MBA MBA
Executive MBA Executive MBA
TRIUM EMBA TRIUM EMBA
PhD Program
Overview Overview
HEC Difference HEC Difference
Program details Program details
Research areas Research areas
HEC Community HEC Community
Placement Placement
Job Market Job Market
Admissions Admissions
Financing Financing
Executive Education
Home Home
About us About us
Management topics Management topics
Open Programs Open Programs
Custom Programs Custom Programs
Events/News Events/News
Contacts Contacts
HEC Online
Overview Overview
Degree Program Degree Program
Executive certificates Executive certificates
MOOCs MOOCs
Summer Programs Summer Programs
Youth programs Youth programs
Faculty & Research

Let the Worst One Fail: A Credible Solution to the Too-Big-To-Fail Conundrum - Thomas Philippon

20 May
2021
3:00 pm
Jouy-en-Josas
English

Participate

Add to Calendar
2021-05-20T15:00:00 2021-05-20T16:00:00 Let the Worst One Fail: A Credible Solution to the Too-Big-To-Fail Conundrum - Thomas Philippon Finance Speaker : Thomas Philippon (NYU)  Videoconference Jouy-en-Josas

Finance

Speaker : Thomas Philippon (NYU) 

Videoconference

We study time-consistent bank resolution mechanisms. When interventions are ex post efficient, a government cannot commit not to inject capital into the banking system. Contrary to common wisdom, however, we show that the government may still be able to implement the first best allocation because it can use the distribution of bailouts across multiple banks to provide ex ante incentives. We show that the efficient mechanism has the feature of a tournament. If each bank’s net transfer from the government can only depend on its own performance, no credible mechanism can prevent maximal risk-taking by all banks. In stark contrast, using relative performance evaluation during the crisis can implement the first-best risk level while remaining credible. In particular, we analyze properties of credible tournament mechanisms that provide support to the best performing banks and resolve the worst performing ones. We extend our framework to allow for contagion and imperfect competition among banks. Our mechanism continues to perform well if banks are partially substitutable and if banks are heterogeneous in their size, interconnections, and thus systemic risk, as long as bailout funds can be targeted to particular banks.

Click here to download the paper

Participate

Add to Calendar
2021-05-20T15:00:00 2021-05-20T16:00:00 Let the Worst One Fail: A Credible Solution to the Too-Big-To-Fail Conundrum - Thomas Philippon Finance Speaker : Thomas Philippon (NYU)  Videoconference Jouy-en-Josas