Risky bank guarantees

Implicit Guarantees for Bank Debt: Where Do We Stand?

The global financial crisis and the policy response to it have placed a sharp spotlight on the issue of implicit guarantees for bank debt. This report discusses the incidence of implicit government guarantees for bank debt, their determinants, and estimates of their value. It shows i) that the extent of implicit guarantees differs from one banking sector to another and, within a given banking s...

Bank Guarantees and Letters of Credit : Time for a Return to the Fold

or independent promise. 3.4.3 Abstract Language The abstract section expresses the guarantor's irrevocable and certain promise to pay a sum of money upon compliance with stipulated conditions and within a certain term. Thus, the German banking forms of tender guarantees compiled by Stumpf and Ullrich state: the guarantor hereby undertakes irrevocably to pay the beneficiary, within a period of 1...

Money in the Bank: Distortive Effects of Accumulated Earnings on Risky Choice

A new study by Juechems et al. (2017) demonstrates that individuals take fewer risks as they accumulate monetary reward. The ventromedial prefrontal cortex plays a key role in the decision process, encoding both momentary reward and the context of the accumulated wealth.

Monitoring and Controlling Bank Risk: Does Risky Debt Serve any Purpose?

We examine whether mandating banks to issue subordinated debt would serve to enhance market monitoring and control risk taking. To evaluate whether subordinated debt enhances risk monitoring, we extract the credit-spread curve for each banking firm in our sample and examine whether changes in credit spreads reflect changes in bank risk variables, after controlling for changes in market and liqu...

0 3 0 1 Monitoring and Controlling Bank Risk : Does Risky Debt Serve any