Resolution Costs and the Bussiness Cycle

Resolution Costs and the Bussiness Cycle There are a number of factors that may contribute to the cost of resolving a failed bank In this paper we study the behavior of the costs of resolving a failed bank as those costs change over the busi

There are a number of factors that may contribute to the cost of resolving a failed bank In this paper we study the behavior of the costs of resolving a failed bank as those costs change over the business cycle We find evidence that the costs are related to the state of the business cycle Both the contraction and the expansion that preceded it appear to be important inThere are a number of factors that may contribute to the cost of resolving a failed bank In this paper we study the behavior of the costs of resolving a failed bank as those costs change over the business cycle We find evidence that the costs are related to the state of the business cycle Both the contraction and the expansion that preceded it appear to be important in explaining the loss that the FDIC experiences when a bank fails In addition, a number of other bank specific variables appear to be linked to loss rates for a failed institution.