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Informational Rents, Macroeconomic Rents, and Efficient Bailouts / Thomas Philippon, Philipp Schnabl.
- Format:
- Book
- Author/Creator:
- Philippon, Thomas.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w16727.
- NBER working paper series no. w16727
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2011.
- Summary:
- We analyze government interventions to alleviate debt overhang among banks. Interventions generate two types of rents. Informational rents arise from opportunistic participation based on private information while macroeconomic rents arise from free riding. Minimizing informational rents is a security design problem and we show that warrants and preferred stocks are the optimal instruments. Minimizing macroeconomic rents requires the government to condition implementation on sufficient participation. Informational rents always impose a cost, but if macroeconomic rents are large, efficient recapitalizations can be profitable.
- Notes:
- Print version record
- January 2011.
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