Banking Crises and Bank Rescues: The Effect of Reputation

Posted: 26 Oct 2000

See all articles by Jenny Corbett

Jenny Corbett

Australian National University (ANU) - Crawford School of Public Policy; University of Oxford - Nissan Institute of Japanese Studies; Centre for Economic Policy Research (CEPR)

Janet Mitchell

National Bank of Belgium - Department of Financial Stability; Centre for Economic Policy Research (CEPR)

Abstract

This paper focuses on bank rescue packages and on the behaviour of troubled banks in light of rescue offers. A puzzling feature of experience with banking crises is that in many cases policy authorities make offers of bank rescue, and banks are reluctant to accept these offers. We study situations in which regulators have decided to offer bank rescue plans, and we show that a combination of factors, including bankers' reputational concerns, can explain banks' potential reluctance to accept offers of recapitalization.

JEL Classification: G21. G28

Suggested Citation

Corbett, Jennifer M. and Mitchell, Janet, Banking Crises and Bank Rescues: The Effect of Reputation. Journal of Money, Credit and Banking, Vol. 32, No. 3, Part II, August 2000, and "What Should Central Banks Do?" Conference Paper (sponsored by the Federal Reserve Bank of Cleveland, Oct. 27-29, 1999, Joseph G. Haubrich, Special Issue Editor) . Available at SSRN: https://ssrn.com/abstract=228996

Jennifer M. Corbett (Contact Author)

Australian National University (ANU) - Crawford School of Public Policy ( email )

Crawford Building
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

University of Oxford - Nissan Institute of Japanese Studies ( email )

27 Winchester Road
Oxford OX2 6NA
United Kingdom
01865 274575 (Phone)
01865 274574 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Janet Mitchell

National Bank of Belgium - Department of Financial Stability ( email )

14 Blvd de Berlaimont
B-1000 Brussels
Belgium
+32 2 221 3459 (Phone)
+32 2 221 3104 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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