|Monday, July 23, 2018 (01 Mordad 1397)||15:00 – 16:00||Khatam University, Room 202|
“Government guarantees to financial institutions are common all over the world. The recent financial crisis has led to renewed interest and debate about their role and their desirability. On the one hand, government guarantees are thought to have a positive role in preventing panic among investors, and hence help stabilize the financial system. On the other hand, they may distort banks incentives, thus leading to an increase in financial fragility.” This paper provides a framework to study the effects of government guarantees on banks’ and depositors’ behavior.