01978cas a2200253 a 4500 AALejournalIMF005426 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451871081 1018-5941 BD-DhAAL BD-DhAAL Laeven, Luc. The Use of Blanket Guarantees in Banking Crises / Luc Laeven, Fabian Valencia. Washington, D.C. : International Monetary Fund, 2008. 1 online resource (43 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students In episodes of significant banking distress or perceived systemic risk to the financial system, policymakers have often opted for issuing blanket guarantees on bank liabilities to stop or avoid widespread bank runs. In theory, blanket guarantees can prevent bank runs if they are credible. However, guarantee could add substantial fiscal costs to bank restructuring programs and may increase moral hazard going forward. Using a sample of 42 episodes of banking crises, this paper finds that blanket guarantees are successful in reducing liquidity pressures on banks arising from deposit withdrawals. However, banks' foreign liabilities appear virtually irresponsive to blanket guarantees. Furthermore, guarantees tend to be fiscally costly, though this positive association arises in large part because guarantees tend to be employed in conjunction with extensive liquidity support and when crises are severe. Mode of access: Internet Valencia, Fabian. IMF Working Papers; Working Paper ; No. 2008/250 Full text available on IMF http://elibrary.imf.org/view/journals/001/2008/250/001.2008.issue-250-en.xml IMF e-Library