Sovereign Debt Crises and Financial Bailouts: The Anatomy and Components of an Everlasting Relationship (II)
Recovering from the Global Financial Crises Business Expert Press 2013
Posted: 12 Feb 2012 Last revised: 14 Dec 2016
Date Written: February 11, 2012
Abstract
Just as sound judgment is required in deciding which institutions should be granted financial bailouts, timing is crucial in discerning which information should be disseminated under certain financial conditions.
Even though systemic risks and asymmetric information constitute embodiments of the rationale for financial regulation, timing and effective communication are crucial elements which help to decide when and if to disseminate certain information. Furthermore, where financial indicators point towards certain information, communication between parties could play a greater role in accurately discerning which course of action.
Keywords: asymmetric information, systemic risks, financial regulation, bailouts, moral, hazard, communication, judgment
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