Central banking reform and overcoming the moral hazard problem
The case of Brazil
Bibliographic Data
| ID | 4368401 |
|---|---|
| Authors | Lourdes Sola (0000-0002-6114-1144, Universidade de São Paulo), Christopher Garman, Christopher Da Cunha Bueno Garman (Universiry of California, United States), Moisés S Marques (Universidade de São Paulo, corresponding author) |
| Year | 2001 |
| Volume | 21 |
| Issue | 3 |
| Pages | 407-432 |
| Publication date | 2001-09-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Brazilian Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0101-3157 • E-ISSN: 1809-4538 |
| Publisher | FapUNIFESP (SciELO) (PUBLISHER) |
| DOI | 10.1590/0101-31572001-1252 |
| OpenAlex | W3190688418 |
| SCIELO_PID | S0101-31572001000300407 |
| Language | EN |
| Citations received | 4 |
| References cited | 3 |
The implicit assumption that governments will bailout financial institutions under distress can generate negative incentives for the development of a sound financial system. This paper begins from the premise that these negative incentives, which create a situation of moral hazard, is essentially a political problem rather than a technical problem over generating correct institutional incentives. In the Brazilian case, we argue the current administration of Fernando Henrique Cardoso was only able to significantly reduce its moral hazard problem in the financial sector through distancing its political relationship with two important political actors: the private financial sector and state governors. The ability of the government to eliminate the implicit assumption of an eventual Central Bank bailout over public and private commercial banks was only made possible through a series of political conditions, which includes the end of hyper-inflation under the Real Plan, that reduced the government's dependence upon those two important political actors
Bailout · Business · Economic growth · Economics · Financial crisis · Financial system · Government (linguistics · Incentive · Macroeconomics · Market economy · Monetary economics · Moral hazard · Political economy · Political science · Politics · Private sector · Banking stability, regulation, efficiency · Economic Theory and Policy · Finance · Fiscal Policies and Political Economy · Law
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| Unique citing works | 4 |
|---|---|
| Citations per year | 0,17 |
| Citation span | 2003 - 2025 (23) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 4 |