Forbearance and Prompt Corrective Action
构建动态模型研究银行监管者应宽容处理问题银行还是及时终止，发现当抵押品价值崩溃的先验概率足够低时宽容更优，反之则应及时终止。
This article investigates whether a bank regulator should terminate problem banks promptly or exercise forbearance. We construct a dynamic model economy in which entrepreneurs pledge collateral, borrow from banks, and invest in long‐term projects. We assume that collateral value has aggregate risk over time, that in any period entrepreneurs can abscond with the projects but lose the collateral, and that depositors can withdraw deposits. We show that optimal regulation exhibits forbearance if the ex‐ante probability of collapse in collateral value is sufficiently low, but exhibits prompt termination of problem banks if this probability is sufficiently high.