Extracting Nontransparent Safety Net Subsidies by Strategically Expanding and Contracting a Financial Institution’s Accounting Balance Sheet
Financial safety nets are embedded in national regulatory systems that embrace at least three conflicting goals: maximizing aggregate social welfare, rescuing distressed institutions, and avoiding blame for things that go wrong. This paper develops a model that shows how opportunistic managers of a...
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| Veröffentlicht in: | Journal of financial services research 2009-12, Vol.36 (2-3), p.161-168 |
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| container_end_page | 168 |
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| container_title | Journal of financial services research |
| container_volume | 36 |
| creator | Kane, Edward J. |
| description | Financial safety nets are embedded in national regulatory systems that embrace at least three conflicting goals: maximizing aggregate social welfare, rescuing distressed institutions, and avoiding blame for things that go wrong. This paper develops a model that shows how opportunistic managers of a financial institution can use financial engineering to increase its access to safety net subsidies in a combination of overt and covert ways. Overtly, it can increase its size, complexity, and geographic footprint. These actions increase the political influence it can wield to subvert regulation. Covertly, it can increase its leverage and portfolio volatility in ways that existing monitoring technologies do not fully register. |
| doi_str_mv | 10.1007/s10693-009-0071-x |
| format | Article |
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Strategically Expanding and Contracting a Financial Institution’s Accounting Balance Sheet</title><author>Kane, Edward J.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c475t-2457608e206367ff81e019b104f55f01757f28d2a6a859dd637fcf65715542b53</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2009</creationdate><topic>Accounting</topic><topic>Antitrust</topic><topic>Arbitrage</topic><topic>Balance sheets</topic><topic>Banking</topic><topic>Banking industry</topic><topic>Economic crisis</topic><topic>Economics and Finance</topic><topic>Finance</topic><topic>Financial crisis</topic><topic>Financial economics</topic><topic>Financial institutions</topic><topic>Financial safety net</topic><topic>Financial Services</topic><topic>Government subsidies</topic><topic>Macroeconomics/Monetary Economics//Financial Economics</topic><topic>Politics</topic><topic>Prudential supervision</topic><topic>Regulation of 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Res</stitle><date>2009-12-01</date><risdate>2009</risdate><volume>36</volume><issue>2-3</issue><spage>161</spage><epage>168</epage><pages>161-168</pages><issn>0920-8550</issn><eissn>1573-0735</eissn><abstract>Financial safety nets are embedded in national regulatory systems that embrace at least three conflicting goals: maximizing aggregate social welfare, rescuing distressed institutions, and avoiding blame for things that go wrong. 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| ispartof | Journal of financial services research, 2009-12, Vol.36 (2-3), p.161-168 |
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| language | eng |
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| source | RePEc; SpringerNature Journals; EBSCOhost Business Source Complete |
| subjects | Accounting Antitrust Arbitrage Balance sheets Banking Banking industry Economic crisis Economics and Finance Finance Financial crisis Financial economics Financial institutions Financial safety net Financial Services Government subsidies Macroeconomics/Monetary Economics//Financial Economics Politics Prudential supervision Regulation of financial institutions Studies Subsidies Supervision |
| title | Extracting Nontransparent Safety Net Subsidies by Strategically Expanding and Contracting a Financial Institution’s Accounting Balance Sheet |
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