State Guarantees for Financial Institutions: State Aid and Moral Hazard

2014 ◽  
Keyword(s):  
Moral Hazard ◽  
Financial Institutions ◽  
State Aid

Loan collaterals and collateral substitutes in rural finance: a review

2015 ◽  
Vol 11 (2) ◽  
pp. 36-56
Author(s):  
MG Maiangwa
Keyword(s):  
Moral Hazard ◽  
Financial Markets ◽  
Financial Institutions ◽  
Farm Households ◽  
Rural Finance ◽  
Traditional Methods ◽  
Limited Availability ◽  
Rural Financial Markets

Poor farm households and other microentrepreneurs have difficulties in obtaining loans from banks and other financial institutions because they are unable to provide securities or collaterals for the loans. Collaterals on loans reduce uncertainty and moral hazard problems for creditors. They also serve as a measure of the seriousness of the borrower. The limited availability of conventional collaterals in rural financial markets has led to the acceptance of non-traditional methods of loan security referred to as collateral substitutes. This paper reviews loan collaterals and collateral substitutes in the rural financial markets of developing countries.Keywords:: Collaterals, collateral substitutes, rural finance.

scholarly journals Collective Moral Hazard and the Interbank Market

2020 ◽  
Vol 2020 (098) ◽  
pp. 1-60
Author(s):  
Levent Altinoglu ◽  
◽  
Joseph E. Stiglitz ◽  
Keyword(s):  
Moral Hazard ◽  
Financial Institutions ◽  
Portfolio Choice ◽  
Risk Taking ◽  
Financial System ◽  
Interbank Market ◽  
Constrained Efficiency ◽  
Macroprudential Regulation ◽  
Systemic Crisis ◽  
The Government

The concentration of risk within financial system is considered to be a source of systemic instability. We propose a theory to explain the structure of the financial system and show how it alters the risk taking incentives of financial institutions. We build a model of portfolio choice and endogenous contracts in which the government optimally intervenes during crises. By issuing financial claims to other institutions, relatively risky institutions endogenously become large and interconnected. This structure enables institutions to share the risk of systemic crisis in a privately optimal way, but channels funds to relatively risky investments and creates incentives even for smaller institutions to take excessive risks. Constrained efficiency can be implemented with macroprudential regulation designed to limit the interconnectedness of risky institutions.

scholarly journals Judgment of the Court of Justice in C-526/14 Tadej Kotnik and Others v. Državni zbor Republike Slovenije and permissibility of granting State aid to financial institutions

2018 ◽  
Vol 6 (2) ◽  
pp. 89
Author(s):  
Łukasz Stępkowski
Keyword(s):  
Financial Institutions ◽  
State Aid ◽  
Eu Law ◽  
Court Of Justice

The present work explores the Court of Justice’s decision in C-526/14 Tadej Kotnik and Others, along with its background, elements that led to it and subsequent developments in EU law. The author comments on the Court’s reasoning to discover whether the case was decided meritoriously or per incuriam.

scholarly journals Analisis Jaminan Dalam Akad-Akad Bagi Hasil (Akad Mudharabah dan Akad Musyarakah) Di Perbankan Syariah

2021 ◽  
Vol 4 (1) ◽  
pp. 1
Author(s):  
Aufa Islami
Keyword(s):  
Moral Hazard ◽  
Financial Institutions ◽  
Profit Sharing ◽  
Islamic Banking ◽  
Breach Of Contract ◽  
Normative Approach ◽  
For Profit ◽  
Islamic Financial Institutions

This research is entitled Analysis of Guarantees in Profit Sharing Contracts (Mudharabah and Musyarakah contracts) in Islamic banking. This research was conducted with the aim of analyzing the guarantees contained in profit sharing contracts including the Mudharabah contract and the Musyarakah contract in Islamic Banking. This article research uses a normative approach. The normative approach is used for research from the perspective of fiqh muamalat regarding the position of the guarantee in the profit sharing contract. From this research it can be concluded that basically there is no guarantee for profit sharing contracts, such as mudarabah and musyarakah, except as a guarantee of the possibility of moral hazard being carried out by the contract partners. In practice, Islamic financial institutions, especially Islamic banking, always withdraw material guarantees for the profit sharing contracts they cover with their partners (customers). However, it must be remembered that the withdrawal of the material guarantee must be limited to cases where there is a loss due to unlawful acts, negligence or default by the customer. In the event that the loss occurs beyond the customer's fault, negligence or breach of contract, the guarantee may not be executed.

scholarly journals Moral Hazard and Government Guarantees in the Banking Industry ‡‡

2015 ◽  
Vol 1 (1) ◽  
pp. 30-50 ◽  
Author(s):  
Franklin Allen ◽  
Elena Carletti ◽  
Itay Goldstein ◽  
Agnese Leonello
Keyword(s):  
Moral Hazard ◽  
Financial Institutions ◽  
Banking Industry ◽  
Financial Sector ◽  
Public Funds ◽  
Public Intervention ◽  
Conventional View ◽  
Excessive Risk ◽  
New Framework ◽  
Made In

Abstract The massive use of public funds in the financial sector and the large costs for taxpayers are often used to justify the idea that public intervention should be limited. This conclusion is based on the idea that government guarantees always induce financial institutions to take excessive risk. In this article, we challenge this conventional view and argue that it relies on some specific assumptions made in the existing literature on government guarantees and on a number of modelling choices. We review the theory of government guarantees by highlighting and discussing the role that these underlying assumptions play in the assessment of the desirability and effectiveness of government guarantees and propose a new framework for thinking about them.

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