{"id":15,"date":"2009-11-10T00:32:57","date_gmt":"2009-11-10T08:32:57","guid":{"rendered":""},"modified":"2011-06-16T12:31:31","modified_gmt":"2011-06-16T19:31:31","slug":"ssrn-the-risk-externalities-of-too-big-to-fail-by-nassim-taleb-charles-tapiero","status":"publish","type":"post","link":"https:\/\/www.blackswanreport.com\/blog\/2009\/11\/ssrn-the-risk-externalities-of-too-big-to-fail-by-nassim-taleb-charles-tapiero\/","title":{"rendered":"SSRN-The Risk Externalities of Too Big to Fail by Nassim Taleb, Charles Tapiero"},"content":{"rendered":"<blockquote><p>Shared by  JohnH<br \/>\n<br \/>\nLinks to download site.<\/p><\/blockquote>\n<div>The Risk Externalities of Too Big to Fail<\/div>\n<p><center><font face=\"Myriad Roman, Arial, Helvetica, Sans-serif;\" size=\"2\"><br \/><a href=\"http:\/\/papers.ssrn.com\/sol3\/cf_dev\/AbsByAuth.cfm?per_id=475810\" style=\"font-size:14px;font-weight:bold\" title=\"View other papers by this author\">Nassim Nicholas  Taleb <\/a><br \/>NYU-Poly Institute<\/p>\n<p><a href=\"http:\/\/papers.ssrn.com\/sol3\/cf_dev\/AbsByAuth.cfm?per_id=1264457\" style=\"font-size:14px;font-weight:bold\" title=\"View other papers by this author\">Charles  S.  Tapiero <\/a><br \/>NYU Poly &#8211; Department of Finance and Risk Engineering<br \/><\/font><\/p>\n<p><font face=\"Myriad Roman, Arial, Helvetica, Sans-serif;\" size=\"2\">November 1, 2009<\/font><\/p>\n<p><\/center><br \/><strong><font face=\"Myriad Roman, Arial, Helvetica, Sans-serif;\" size=\"2\">Abstract: <\/font><\/strong>\u00a0\u00a0\u00a0\u00a0<br \/><font face=\"Myriad Roman, Arial, Helvetica, Sans-serif;\" size=\"2\">This paper examines the risk externalities stemming from the size of institutions.  Assuming (conservatively) that a firm risk exposure is limited to its capital while its external (and random) losses are unbounded we establish a condition for a firm to be too big to fail.  In particular, expected risk externalities\u2019 losses conditions for positive first and second derivatives with respect to the firm capital are derived.  Examples and analytical results are obtained based on firms\u2019 random effects on their external losses (their risk externalities) and policy implications are drawn that assess both the effects of \u201ctoo big to fail firms\u201d and their regulation. <\/font><\/p>\n<p><font face=\"Myriad Roman, Arial, Helvetica, Sans-serif;\" size=\"2\"><\/font><\/p>\n<p><font face=\"Myriad Roman, Arial, Helvetica, Sans-serif;\" size=\"2\"><b>Keywords:<\/b> banking crisis, risk management, too big to fail<\/font><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Shared by  JohnH <\/p>\n<p>Links to download site.<br \/>\nThe Risk Externalities of Too Big to FailNassim Nicholas  Taleb NYU-Poly InstituteCharles  S.  Tapiero NYU Poly &#8211; Department of Finance and Risk EngineeringNovember 1, 2009Abstract: \u00a0\u00a0\u00a0\u00a0This paper examines&#8230;<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,445,73],"tags":[],"class_list":["post-15","post","type-post","status-publish","format-standard","hentry","category-feeds","category-papers","category-pdf"],"_links":{"self":[{"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/posts\/15","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/comments?post=15"}],"version-history":[{"count":1,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/posts\/15\/revisions"}],"predecessor-version":[{"id":3663,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/posts\/15\/revisions\/3663"}],"wp:attachment":[{"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/media?parent=15"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/categories?post=15"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/tags?post=15"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}