Destructive effects of constructive ambiguity in risky times |
| |
Authors: | Dmitri Vinogradov |
| |
Institution: | University of Essex, Wivenhoe Park, Colchester, United Kingdom |
| |
Abstract: | Unclear bailout policy, underinvestment and calls for greater responsibility by bankers are some of the observations from the recent financial crisis. The paper explains underinvestment as an inefficient equilibrium. Under ambiguous bailout policy agents suffer from a lack of information about the insolvency resolution methods. The beliefs of bankers regarding whether an insolvent bank is liquidated, may differ from those of depositors even if bankers and depositors possess absolutely symmetric information about the economy. This disrupts the flow of funds through the banking channel if the investment climate is characterized by high aggregate risk. The paper suggests policy implications aimed at a reduction of the anxiety of agents and at aligning their beliefs to restore efficiency. |
| |
Keywords: | G21 G28 D80 E58 |
本文献已被 ScienceDirect 等数据库收录! |
|