Quantifying structural subsidy values for systemically important financial institutions

Bank Bonds: Size, Systemic Relevance and the Sovereign

“…As for the role of the sovereign, there is empirical evidence that governments of strong creditworthiness provide an implicit guarantee to the banking system of the domestic economy (Sironi 2003;Gropp et al 2011, Packer andTarashev 2011;Ueda and Weder di Mauro 2013). This effect goes through a higher rating assigned to financial institutions which benefit of the implicit support.…”

Financial institution credit assessment and implications for portfolio managers

“…Despite debate over the use of ratings, they are still very much related to bond 9 An alternative approach used in the literature is to create a single rating variable using an ordinal scale where each unit represents a different rating category ranked from highest to lowest. As an example of this approach see Ueda and Weder di Mauro (2013). Our results do not differ if we use this approach rather than creating individual rating category dummies.…”

An Overview of Macroprudential Policy Tools

“…The anticipation of bailouts perversely affects the (risk-taking) incentives for SIFIs and other market participants. It introduces a race among institutions to become systemically important, as this lowers the cost of funding, and reduces market discipline for creditors of SIFIs, especially the riskiest ones (Ueda and Weder di Mauro, 2012). In turn, these behaviors lead to aggregate risk-shifting and distorted competition (see IMF, 2014b).…”