How Big a Problem is Too Big to Fail? A Review of Gary Stern and Ron Feldman's Too Big to Fail: The Hazards of Bank Bailouts
Journal of Economic Literature
vol. 44,
no. 4, December 2006
(pp. 988-1004)
Abstract
This review essay examines whether too-big-to-fail is as serious a problem as Gary Stern and Ron Feldman contend. This essay argues that Stern and Feldman overstate the importance of the too-big-to-fail problem and do not give enough credit to the FDICIA legislation of 1991 for improving bank regulation and supervision. However, this criticism of the Stern and Feldman book does not detract from many of its messages. The policy recommendations in their book have merit even if the too-big-to-fail problem is currently not that serious because these policies make it less likely that a banking crisis will occur even if driven by other factors.Citation
Mishkin, Frederic, S. 2006. "How Big a Problem is Too Big to Fail? A Review of Gary Stern and Ron Feldman's Too Big to Fail: The Hazards of Bank Bailouts." Journal of Economic Literature, 44 (4): 988-1004. DOI: 10.1257/jel.44.4.988JEL Classification
- E42 Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
- E52 Monetary Policy
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- G28 Financial Institutions and Services: Government Policy and Regulation