CFCM 15/15: Systemic Risk and the Optimal Seniority Structure of Banking Liabilities

Abstract

The paper argues that systemic risk must be taken into account when designing optimal bankruptcy procedures in general, and priority rules in particular. Allowing for endogenous formation of links in the interbank market we show that the optimal policy depends on the distribution of shocks and the severity of fire sales

Download the PDF of this paper

Authors

Sprios Bougheas and Alan Kirman

View all CFCM discussion papers | View all School of Economics featured discussion papers