Title: 'Too-big-to-fail' financial institutions: risks and remedies

Authors: Fabio Panzera, Sergio Rossi

Addresses: Macroeconomics and Monetary Economics, Department of Economics, University of Fribourg, Boulevard de Perolles 90, CH-1700 Fribourg, Switzerland. ' Macroeconomics and Monetary Economics, Department of Economics, University of Fribourg, Boulevard de Perolles 90, CH-1700 Fribourg, Switzerland

Abstract: Too-big-to-fail (TBTF) institutions pose a systemic threat to financial stability, as they exploit the implicit guarantee offered by the State to further increase their businesses as well as the risks they raise for taxpayers. Although TBTF problems have been widely debated in the literature, practical solutions are still lacking in all advanced economies around the world. This paper puts forward a structural reform of banks| bookkeeping, with the aim of refining the latter in order to make it fully transparent, to gain the competitive advantage that results from a financial industry that is more resilient to systemic risks and crises.

Keywords: financial stability; systemic crises; too big to fail companies; TBTF institutions; structural reform; bank bookkeeping; transparency; banking.

DOI: 10.1504/IJTGM.2011.041764

International Journal of Trade and Global Markets, 2011 Vol.4 No.3, pp.311 - 327

Published online: 02 Aug 2011 *

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