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| Author: | Schellhorn, C. Spellman, L. |
| Title: | Bank forbearance: a market-based explanation |
| Journal: | Quarterly Review of Economics and Finance
2000 : WINTER, VOL. 40:4, p. 451-466 |
| Index terms: | BANKS DISCIPLINE DEBT |
| Language: | eng |
| Abstract: | Why does forbearance for insolvent banks occur? The authors offer an explanation based on stockholders' ability to appeal to the courts for reversal and monetary damages after the regulator has initiated a receivership action. Although this has always been theoretically possible, precedents and common law standards now exist. The authors calculate the market's perceived postponement of receiverships for banks thought to be insolvent. |
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