We study the efficient resolution of global banks by national regulators. Single-point-of-entry (SPOE) resolution, where loss-absorbing capacity is shared across jurisdictions, is efficient in principle, but may not be implementable. First, when expected transfers across jurisdictions are too asymmetric, national regulators fail to set up an efficient SPOE resolution regime ex ante. Second, when required ex-post transfers across jurisdictions are too large, national regulators ring-fence local banking assets instead of cooperating in a planned SPOE resolution. In this case, multiple-point-of-entry (MPOE) resolution, where loss-absorbing capacity is pre-assigned to jurisdictions, is more efficient. Our analysis highlights a complementarity between bank resolution and the structure of global banks: the more decentralized a global bank's operations, the greater the relative efficiency of MPOE resolution.
Bolton, Patrick, and Martin Oehmke. "Bank Resolution and the Structure of Global Banks." Columbia Business School, February 7, 2017.
Each author name for a Columbia Business School faculty member is linked to a faculty research page, which lists additional publications by that faculty member.
Each topic is linked to an index of publications on that topic.