Too big to ignore: a review

Abstract

The purpose of this paper is to study many of the complex issues and tradeoffs, policymakers must put in place in evaluating reforms to the oversight of Systemically Important Banks (SIBs). In particular, the author summarized a range of practical solutions covering two critical dimensions of debate: crisis prevention and crisis resolution. This study is important considering the extensive literature that has documented the impact of government policies on the financial institutions during and after the global financial and economic crises. The author, therefore, supports the notion that government play unprecedented role to shore up financial institution deemed to be too big to fail. He observed that government guarantees of bank debt, capital injections and cleansing of bank balance sheets, trigger a loss of public confidence in the financial system.