Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/260999 
Year of Publication: 
2022
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 8/2022
Publisher: 
Bank of Finland, Helsinki
Abstract: 
We study public funding of banks and non-financial firms in a time of crisis. We find that bank capitalization is more effective in stabilizing the economy than direct funding to firms, but it also creates larger distortions. We show that the optimal, social-welfare-maximizing, structure of a public funding program depends on its size. Small funding programs should target banks while large programs should be directed at non-financial firms.
Subjects: 
economic crises
optimal public funding
financial frictions
macro-financial linkages
JEL: 
E44
G21
G28
G38
H12
H81
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-412-3
Document Type: 
Working Paper

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