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dc.contributor.author Hunt, Shane
dc.date.accessioned 2012-04-16T12:17:59Z
dc.date.available 2012-04-16T12:17:59Z
dc.date.issued 2012-04-16
dc.identifier.uri http://hdl.handle.net/10161/5131
dc.description Honors Thesis en_US
dc.description.abstract This paper explores a previously overlooked unintended consequence of a private bank accepting Central Bank loans as a lender of last resort. Applying the basic Markowitz Security Model, I explore the potential effect of a private bank accepting a Central Bank loan as a signal of increased risk of investment in that private bank to the private markets. Finding a possibility that private investors will charge a penalty risk premium for having sought Central Bank financing, I consider the effects of this premium in three different game theoretic scenarios, each with a different set of assumptions that could apply in different Economic settings. Depending on the specific environment, possible effects include dependence on Central Bank financing, bankruptcy, or an eventual return to the private financial markets for future funding. en_US
dc.subject Banking en_US
dc.subject Central Banking en_US
dc.subject Finance en_US
dc.title The Hidden Costs of Central Bank Borrowing en_US
dc.department Economics en_US

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