Broad-Based Capital Injection Programs

Authors

June Rhee, Yale School of Management School of ManagementFollow
Junko Oguri, Yale School of ManagementFollow
Greg Feldberg, Yale School of Management School of ManagementFollow
Andrew Metrick, Yale School of ManagementFollow

Document Type

Survey

Case Series

Broad-based Capital Injections

JEL Codes

G01, G28

Abstract

This paper surveys 36 broad-based capital injection (BBCI) programs and attempts to identify some best (and worst) practices. We argue that it is crucial to distinguish between programs implemented during acute (“panic”) and chronic (“debt overhang”) phases of a crisis, where the goals of program design should be different. In an acute phase, programs should be designed to influence the behavior of bank counterparties, while in chronic phases, the focus should be on bank behavior itself. With this framing, we identify seven themes to guide program design, and provide many illustrative examples for the policymaker’s tool kit.

Recommended Citation

Rhee, June; Oguri, Junko; Feldberg, Greg; and Metrick, Andrew (2022) "Broad-Based Capital Injection Programs," Journal of Financial Crises: Vol. 4 : Iss. 1, 1-48.
Available at: https://elischolar.library.yale.edu/journal-of-financial-crises/vol4/iss1/1

Date Revised

2022-04-08