THE RISK OF PROPAGATION OF BANK FAILURES THROUGH INTERBANK MARKETS

ABSTRACT. Ma reviews and examines the principal steps taken by the Chinese government since 1998 to repair the bank balance sheets and how they have been funded. Ito and Hashimoto analyze the bank restructuring process in Malaysia from the currency crisis of 1997 to present. Rochet develops a simple model of moral hazard in banking that justifies the need for prudential regulation and/or market discipline.

JEL: G32, K32