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SUMMARY:Financing and Resolving Banking Groups (joint with Albert Banal-Es
 tanol and Julian Kolm) - Gyöngyi Lóránth (University of Vienna)
DTSTART:20200305T123000Z
DTEND:20200305T133000Z
UID:TALK131800@talks.cam.ac.uk
CONTACT:CERF/CF Admin
DESCRIPTION:Abstract\nWe study the formation and resolution of multi-unit 
 banking groups.\nBanking groups create financing synergies by transferring
  financing capacity across subsidiaries. Single-point-of-entry (SPOE) reso
 lution imposes a single balance sheet on the banking group. This allows th
 e regulator to shift\nresources across banking units upon resolution\, thu
 s permitting the ex-post efficient continuation of units that are hit by n
 egative liquidity shocks.\nHowever\, SPOE resolution can also prevent the 
 ex-ante efficient formation of banking groups because outside investors ta
 ke the ex-post transfers into account. Multiple-point-of-entry (MPOE) reso
 lution separates banking units and maintains limited liability within the 
 group. Separate resolution can commit the regulator to shut down units\, w
 hich reduces the ex-post required financing capacity and may ease the ex-a
 nte financing constraints.\nIn addition\, SPOE resolution may not allow th
 e group to exploit all financing synergies because it may prevent the choi
 ce of capital structure that minimizes the costs of incentive provision. M
 aking the choice between SPOE and MPOE resolution bank specific increases 
 efficiency relative\nto the adoption of a uniform resolution regime for al
 l banks. Resolution improves outcomes relative to friction-less private fi
 nancial restructuring.
LOCATION:KH107\, Keynes House\, Cambridge Judge Business School
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