Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87077
Authors: 
Arping, Stefan
Year of Publication: 
2009
Series/Report no.: 
Tinbergen Institute Discussion Paper 09-057/2
Abstract: 
We analyze the optimal pricing of government-sponsored bank debt guarantees within the context of an asset substitution framework. We show that the desirability of fair pricing of guarantees depends on the degree of transparency of the banking sector: in relatively opaque banking systems, fair pricing exacerbates banks' incentive to take excessive risks, whereas the opposite is true in relatively transparent banking systems.
Subjects: 
Debt Guarantees
Fair Pricing
Financial Stability
JEL: 
G21
G38
Document Type: 
Working Paper

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