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2 edition of Global moral hazard, capital account liberalization and the overlending syndrome found in the catalog.

Global moral hazard, capital account liberalization and the overlending syndrome

Eduardo Levy Yeyati

Global moral hazard, capital account liberalization and the overlending syndrome

by Eduardo Levy Yeyati

  • 106 Want to read
  • 34 Currently reading

Published by International Monetary Fund, Monetary and Exchange Affairs Department in [Washington, D.C.] .
Written in English

    Subjects:
  • Financial crises.,
  • Banks and banking.,
  • Bank loans.,
  • International finance.,
  • Capital movements.,
  • Deposit insurance.,
  • Country risk.

  • Edition Notes

    Statementprepared by Eduardo Levy Yeyati.
    SeriesIMF working paper -- WP/99/100
    ContributionsInternational Monetary Fund. Monetary and Exchange Affairs Dept.
    The Physical Object
    Pagination22 p. :
    Number of Pages22
    ID Numbers
    Open LibraryOL18721349M

      Moral hazard is a situation in which one party engages in risky behavior or fails to act in good faith because it knows the other party bears the economic consequences of their behavior. Any time Author: Greg Depersio. ‘overlending’, banking problems, and the composition, maturity and size of capital inÀows. Keywords: Asia˚ moral hazard˚ balance of payment crisis˚ banking crisis˚ speculative attacks˚ capital process of capital account liberalization and ¿nancial market deregulation in the region during.

    Fed Intervention: Managing Moral Hazard in Financial Crises by Harvey Rosenblum, Danielle DiMartino, Jessica J. Renier and Richard Alm at the end of september , U.s. policymakers had been working for more than a year to contain the shock waves from plunging home prices and the subsequent financial market turmoil. For the Federal reserve, theFile Size: KB. The economy will exhibit over-investment in the first period compared with the case without moral hazard. But this overspending is relatively small when the economy is not integrated with the global financial market (because there is only a limited amount of capital available domestically).

    The international dimension of the moral hazard problem hinged upon the behavior of international banks, which over the period leading to the crisis had lent large amounts of funds to the region’s domestic intermediaries, with apparent neglect of the standards for sound risk assessment. 12 Underlying such overlending syndrome may have been Cited by: "The New Global Balance - Part II: Higher Rates Rather than Weaker Dollar", (with Christian Broda and Piero Ghezi). “ The New Global Balance,” , (with Christian Broda and Piero Ghezi), Barclays Capital. “Catalytic Insurance,” , (with Tito Cordella), mimeo, The World Bank.


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Global moral hazard, capital account liberalization and the overlending syndrome by Eduardo Levy Yeyati Download PDF EPUB FB2

The removal of government guarantees in borrowing countries does not eliminate the moral hazard problem posed by the existence of deposit guarantees in lender by: 9. Title: Global Moral Hazard, Capital Account Liberalization and the "Overlending Syndrome" - WP/99/ Created Date: 8/13/ PMCited by: 9.

However, the empirical evidence from the period following the Mexican crisis runs contrary to this prediction: Capital continued flowing, and international yield spreads narrowed, even for Latin American countries where contagion from the Mexican crisis was felt more strongly and adverse effects on investor sentiment were expected to last longer.

Global Moral Hazard, Capital Account Liberalization and the “Overlending Syndrome” Global moral hazard removal of government guarantees in borrowing countries does not eliminate the moral hazard problem posed by the existence of deposit guarantees in lender countries. The paper shows that, after restrictions on international capital flows are lifted, banks in low-risk developed countries benefit from lending funds captured in home markets at low deposit rates to high-risk/high-yield projects in emerging economies, even though Author: Eduardo Levy Yeyati.

Global Moral Hazard, Capital Account Liberalization and the "Overlending Syndrome" The removal of government guarantees in borrowing countries does not eliminate the moral hazard problem posed by the existence of deposit guarantees in lender countries.4/5(73).

We ask whether an increase in capital re-quirements can offset the adverse effects of liberalization. If banks hold sufficient capital, they internalize the adverse consequences of gambling and thus will choose to invest pru-dently. While it is possible to combat moral hazard with capital requirements.

Global Moral Hazard, Capital Account Liberalization and the "Overlending Syndrome" The removal of government guarantees in borrowing countries does not eliminate the moral hazard problem posed by the existence of deposit guarantees in lender countries.4/5(1).

Levy Yeyati E () Global moral hazard, capital account liberalization, and the ‘overlending syndrome’. IMF Working paper WP/99/ (July) McKinnon RI, Mathieson D () How to manage a repressed by: While the traditional view is accurate in the sense that capital requirement can be effective in combating moral hazard, we find, in contrast, that capital requirements are Pareto inefficient.

With deposit insurance, freely determined deposit rates undermine prudent bank by: 99/ Global Moral Hazard, Capital Account Liberalization and the “Overlending Syndrome” Eduardo Levy Yeyati 99/ Enemy of None But a Common Friend of All. An International Perspectiveon the Lender-Of-Last-Resort Function Curzio Giannini 99/1: China's Trade Flows; Changing Price Sensitivies and the Reform Process.

Bank Bailouts; Moral Hazard vs. Value Effect IMF Working Papers, International Monetary Fund View citations (19) See also Journal Article in Journal of Financial Intermediation () Global Moral Hazard, Capital Account Liberalization and the “Overlending Syndrome” IMF Working Papers, International Monetary Fund View citations (1) Eduardo Levy Yeyati, "Global Moral Hazard, Capital Account Liberalization and the “Overlending Syndrome”," IMF Working Papers 99/, International Monetary Fund.

Eduardo Levy Yeyati & Alain Ize, "Dollarization of Financial Intermediation; Causes and Policy Implications," IMF Working Papers 98/28, International Monetary Fund.

good loans, increasing the moral-hazard prob- lem. With sufficient competition banks will find it desirable to gamble. There is thus an incon- sistency of interest-rate liberalization and pru-dential bank behavior. We ask whether an increase in capital re-quirements can offset the adverse effects of Size: KB.

Other accounts have made much of the additional moral hazard associated with the prospect of IMF le nding in the eventuality of payments crises (Calomiris ; Schwartz ).

In this paper, we examine the government's management of emerging financial sector problems in order to assess these claims with respect to the role of moral Size: 85KB. “Global Moral Hazard, Capital Account Liberalization and the ‘Overlending Syndrome’,” JulyIMF Working Paper 99/ “Dollarization of Financial Intermediation: Causes and Policy Implications,” Marzo (with Alain Ize) IMF Working Paper No.

98/ financial liberalization, especially capital account liberalization. McKinnon and Pill() also assert that many liberalizing economies, where banks exploit the potential for moral hazard, have suffered from overborrowing, which is due to overconsumption and overinvestment, followed by financial crisis and bust.

Incentives for Overinvestment. A capital account liberalization is a decision by a country’s government to move from a closed capital account regime, where capital may not move freely in and out of the country, to an open capital account system in which capital can enter and leave at will.

process of capital account liberalization and financial market deregulation in the region during the s, which increased the supply-elasticity of funds from abroad The extensive liberalization of capital markets was consistent with the policy goal of providing a large supply of low-cost funds to national financial institutions and the File Size: KB.

Capital account openness and early warning system for banking crises in G20 countries Article in Economic Modelling – April with 46 Reads How we measure 'reads'. A Working Definition of Moral Hazard (MH) 6 Objective and Methodology of the Paper 8 2.

Was there fiOverlendingfl from Japan to East Asia? Two Stylized Stories Explaining Japanese Capital Flows 9 The Data: Rapid Growth of Japanese Loans to East Asia 9 The MH Stylized Story about Overlending (and Overinvestment) 13 Download Citation | Moral ecologies of subsistence and labour in a migration-affected community of Nepal: Moral ecologies of subsistence and labour | en Labour migration from subsistence.Capital account liberalization, a crucial part of financial liberalization, has been in the long-time debate on its relationship with banking crises.

On the one hand, it may cause volatile capital flows, lower the lending rates, reduce the short-run profits and thus have immediate effects of Cited by: