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Financial Firm Bankruptcy and Systemic Risk

Jean Helwege

出版	SSRN, 2009
URL	http://books.google.com.hk/books?id=hOjJzgEACAAJ&hl=&source=gbs_api

註釋

Financial firm distress often leads to regulatory intervention, such as ldquo;too big to failrdquo; (TBTF) policies. Two oft-cited channels to justify TBTF are domino effects (counterparty risk) and the effects of fire sales. We analyze the policy responses for avoiding systemic risk while considering the role of these two factors. Prior bankruptcies suggest that cascades caused by counterparty risk do not occur, as firms diversify their exposures. Instead, crises tend to be symptomatic of common factors in financial firms' portfolios, which lead to widespread instances of declining asset values and which are often misinterpreted as resulting from fire sales.