Finanzhilfen bei internationalen Verschuldungskrisen?

2010 ◽  
Vol 61 (1) ◽  
pp. 1-20
Author(s):  
Dina D. Dreisbach ◽  
Hans Fehr ◽  
Fabian Kindermann
Keyword(s):  
Moral Hazard ◽  
Financial Support ◽  
Sovereign Debt ◽  
Numerical Solutions ◽  
Strategic Uncertainty ◽  
Trade Off ◽  
Liquidity Provision ◽  
Optimal Policies ◽  
Private Investors ◽  
Catalytic Effects

SummaryThe present paper focuses on the trade-off between official liquidity provision and debtor moral hazard in sovereign debt problems. The financial crisis is caused by the interaction of bad fundamentals, self-fulfilling runs of private investors and optimal policies of the national government and the official lender. Building on the global games approach of Morris and Shin (2006), we extend their analysis by calculating numerical solutions for different values of fundamental and strategic uncertainty. Our results indicate that limited financial support may even strengthen government efforts and improve welfare when fundamentals are weak but not too weak. On the other hand, we are also able to identify debtor moral hazard and welfare reducing catalytic effects with stronger fundamentals.

Eurobonds: Three Lessons from China’s “Debt Centralization/Decentralization” Experience

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Zhiyong An
Keyword(s):  
Moral Hazard ◽  
Euro Area ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Budget Constraint ◽  
Sovereign Debt Crisis ◽  
The European Union ◽  
Member States ◽  
Institutional Mechanism ◽  
Previous Series

Abstract Eurobonds, dubbed as Coronabonds in the context of the current coronavirus crisis, are being hotly debated among the euro area member states amid the COVID-19 pandemic. The debate is in many ways a retread of the euro area sovereign debt crisis of 2011–2012. As China’s “debt centralization/decentralization” experience is comparable with the introduction of Eurobonds in the European Union (EU) in terms of institutional mechanism design, we review our previous series of studies of China’s “debt centralization/decentralization” experience to shed some light on the Eurobonds debate. We obtain three key lessons. First, the introduction of Eurobonds in EU is likely to soften the budget constraint of the governments of the euro area member states. Second, it is also likely to strengthen the moral hazard incentives of the governments of the euro area member states to intentionally overstate their budget problems. Finally, the magnitudes of the moral hazard effects generated by the introduction of Eurobonds in EU are likely larger than their respective counterparts in China.

Mission Creep The Emerging Role of International Investment Agreements in Sovereign Debt Restructuring

2015 ◽  
Vol 6 (2) ◽  
Author(s):  
Rachel D. Thrasher ◽  
Kevin P. Gallagher
Keyword(s):  
Sovereign Debt ◽  
International Investment ◽  
Debt Restructuring ◽  
Mission Creep ◽  
Atlantic Trade ◽  
International Investment Agreements ◽  
Recent Financial Crisis ◽  
Private Investors ◽  
The Right ◽  
Investment Agreements

AbstractThe global community still lacks a regime for sovereign debt restructuring (SDR). However, the recent financial crisis has spawned numerous efforts to fill this glaring gap in global economic governance. At the same time however, there is increasing concern that international investment agreements (IIAs) have already begun to expand their reach into the realm of SDR. Indeed, private investors have attempted to use IIAs to recoup the full value of their bonds in order to circumvent debt restructurings in Argentina and Greece. In this paper we examine the extent to which IIAs are becoming tools for creditors to circumvent debt restructurings and whether new IIAs such as the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership will further advance the ability of creditors to do so. We find that contemporary IIAs are increasingly interpreting sovereign bonds as being under their jurisdiction. Thus, debt restructurings may be increasingly subject to claims filed by holdout creditors wishing to recoup the full value of their bonds through private tribunals under IIAs. That said, we also find that some treaties have begun to provide exceptions for certain types of debt restructurings. While such safeguards are a step in the right direction, they will need to become broader in scope and more widespread in application in order to not interfere with the orderly workout of debt problems in the world economy.

scholarly journals Venture Capital Finance – Eliminating Double Sided Moral Hazards Through Trade-off Between Economic and Behavioural Economic Aspects – A Case Analysis

2021 ◽  
Vol 4 (1) ◽  
Author(s):  
Dhanesh Kumar Khatri
Keyword(s):  
Venture Capital ◽  
Moral Hazard ◽  
Case Analysis ◽  
Economic Aspect ◽  
Decision Quality ◽  
Trade Off ◽  
Moral Hazards ◽  
Work Distribution ◽  
Behavioural Economic ◽  
Value Add

Venture capital finance has two aspects, the economic aspect and the behavioural economic aspect. The economic aspect includes issues such as conflict of interest between the entrepreneur and the venture capitalist (VC), asymmetric information, moral hazard, and compensation issues for both the parties. The behavioural economic aspect is related to relational factors such as empathy and a feeling of fairness and trust shown by both the parties.Therefore, while deciding the financer, entrepreneur should consider both relation aspect and value add services of the financier and strike optimal trade-off. The ensuing case analysis has been carried out focusing on elimination of double sided moral hazards through a proper trade-off between economy and behavioural economic theories (aspects).The performance of the venture can be enhanced by balancing both of these theories in practice. An equity distribution that represents economic reward is a source of motivation for both the parties to put optimal efforts towards the success of the venture. This was seen in the case analysis, when the parties perceived the initial equity distribution agreement as fair, the satisfaction level of all the parties increased, leading to the reduction in the possibility of double-sided moral hazard and ensuring the success of the venture. Moreover, the analysis shows that  information sharing and two-way communication increases trust and improves decision quality. It further focusses on how feedback and proper work distribution results in efficiency of performance for each of the stakeholders, leading to reduced probability of double-sided moral hazards. 

scholarly journals Does a deposit insurance scheme induce moral hazard among bankers? Evidence from an experiment with bankers

2018 ◽  
Vol 20 (3) ◽  
pp. 353
Author(s):  
Gumilang Aryo Sahadewo ◽  
Bernardinus Maria Purwanto ◽  
Rimawan Pradiptyo
Keyword(s):  
Moral Hazard ◽  
Deposit Insurance ◽  
Empirical Studies ◽  
Credit Market ◽  
Bank Failures ◽  
Insurance Scheme ◽  
Deposit Rate ◽  
Trade Off ◽  
Bank Run ◽  
Do So

The implementation of a deposit insurance scheme entails a trade off. On one hand, as shown in theoretical and empirical studies, a deposit insurance scheme reduces the likelihood of a bank run. On the other hand, a deposit insurance scheme induces moral hazard among bankers that may lead to bank failures. We rigorously test the effect of different deposit coverage limit and the implementation of a differential premium treatment on bankers’ behaviors in the deposit and credit market. We do so by designing a laboratory experiment that involves real bankers as participants. We find that the coverage limit treatments do not have any effect on deposit rate offer. Nevertheless, we find that a high deposit coverage limit induces smaller banks to have a higher share of risky projects. This is evidence of moral hazard particularly among small banks.

Capital Markets and Sovereign Defaults

2016 ◽  
pp. 480-512
Author(s):  
Juan H. Flores Zendejas
Keyword(s):  
Capital Markets ◽  
Sovereign Debt ◽  
Conflicts Of Interest ◽  
Main Body ◽  
Liquidity Provision ◽  
History Of ◽  
Sovereign Defaults ◽  
The Relationship ◽  
Supply Side Factors

This chapter provides a historical perspective on the relationship between capital markets and sovereign defaults. While the main body of the sovereign debt literature has rarely incorporated supply side factors, such as market distortions or conflicts of interest, we argue that the history of sovereign defaults cannot be understood without including the evolutionary structure of capital markets. The southern European debt crises and the recent controversy surrounding the role of holdouts demonstrate that certain proposals raised in previous default episodes deserve further discussion, in particular, those aiming to deal with problems of collective action, liquidity provision, and information flaws.

War, Moral Hazard, and Ministerial Responsibility: England After the Glorious Revolution

2011 ◽  
Vol 71 (1) ◽  
pp. 133-161 ◽  
Author(s):  
Gary W Cox
Keyword(s):  
Moral Hazard ◽  
Sovereign Debt ◽  
Central Element ◽  
Central Problem ◽  
Glorious Revolution ◽  
Credible Commitment ◽  
Ministerial Responsibility ◽  
The Glorious Revolution ◽  
Douglass North ◽  
The Revolution

I reexamine Douglass North and Barry Weingast's argument regarding credible commitment and sovereign debt in post-revolution England. The central problem that the architects of the revolution settlement had to solve, I argue, was not the king's frequent reneging on financial commitments (a symptom), but the moral hazard that generated the kings' malfeasance (the underlying cause). The central element of the revolution settlement was thus not better holding kings to their commitments, but better holding royal advisors to account for all consequences of the Crown's policies—through what we now call ministerial responsibility.

scholarly journals Observe Before Play: Multi-Armed Bandit with Pre-Observations

2020 ◽  
Vol 34 (04) ◽  
pp. 7023-7030
Author(s):  
Jinhang Zuo ◽  
Xiaoxi Zhang ◽  
Carlee Joe-Wong
Keyword(s):  
Upper Bound ◽  
Synthetic Data ◽  
Wireless Channel ◽  
Confidence Bound ◽  
Trade Off ◽  
Greedy Strategy ◽  
Optimal Policies ◽  
Centralized Algorithm ◽  
Upper Confidence Bound

We consider the stochastic multi-armed bandit (MAB) problem in a setting where a player can pay to pre-observe arm rewards before playing an arm in each round. Apart from the usual trade-off between exploring new arms to find the best one and exploiting the arm believed to offer the highest reward, we encounter an additional dilemma: pre-observing more arms gives a higher chance to play the best one, but incurs a larger cost. For the single-player setting, we design an Observe-Before-Play Upper Confidence Bound (OBP-UCB) algorithm for K arms with Bernoulli rewards, and prove a T-round regret upper bound O(K2log T). In the multi-player setting, collisions will occur when players select the same arm to play in the same round. We design a centralized algorithm, C-MP-OBP, and prove its T-round regret relative to an offline greedy strategy is upper bounded in O(K4/M2log T) for K arms and M players. We also propose distributed versions of the C-MP-OBP policy, called D-MP-OBP and D-MP-Adapt-OBP, achieving logarithmic regret with respect to collision-free target policies. Experiments on synthetic data and wireless channel traces show that C-MP-OBP and D-MP-OBP outperform random heuristics and offline optimal policies that do not allow pre-observations.

scholarly journals Mining Optimal Policies: A Pattern Recognition Approach to Model Analysis

2020 ◽  
Vol 2 (3) ◽  
pp. 145-166 ◽  
Author(s):  
Fernanda Bravo ◽  
Yaron Shaposhnik
Keyword(s):  
Machine Learning ◽  
Pattern Recognition ◽  
Control Problem ◽  
Admission Control ◽  
Optimization Problem ◽  
Numerical Solutions ◽  
Model Analysis ◽  
Optimal Policies ◽  
Complex Optimization ◽  
Pattern Recognition Approach

This project spawned from an admission control problem we were working on for a major hospital in the Boston area. We tried to incorporate various aspects of the problem in a model, which resulted in a complex optimization problem that was difficult to solve analytically. Although numerical solutions could be computed, we were looking for insights to characterize simple policies that could be used in practice. We then came up with the idea of using machine learning to analyze solutions as a mean for obtaining such insights, an idea we thought could be interesting by itself. The motivating problem is an ongoing separate work.

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