Peer Reviewed Journals

BÉDARD Mathieu (2015) “In Which Context is the Option Clause Desirable?Journal of Business Ethics, in press.

Abstract: “The option clause is a contractual device from free banking experiences meant to prevent banknote redemption duels. It has been used within the Diamond et al. (1983, J Pol Econ 91 (3): 401–19) framework to suggest that very simple contractual solutions can act as an alternative to deposit insurance. This literature has however been ambiguous on whether the option clause can replace deposit insurance outside of those two contexts. It will be argued that the theoretical clause does not generally affect the likelihood that a solvent bank goes bankrupt because of a bank run, as empirical evidence suggests it is already near null, and that the exercise of the clause will have the effect of diminishing the size of creditor claims on bank assets because it exacerbates the agency problem of bank debt. It will therefore be argued that the clause is only desirable in (a) free banking systems that are historically devoid of bank runs in the first place and have other means of managing debt-related agency problems, and (b) under the unrealistic assumption that bank runs are self-fulfilling prophecies. It will be argued that the agency problem of bank debt make the option clause undesirable outside of free banking systems.”
JEL Classifications: N20, G21, G33
Keywords: Financial stability; Bank runs; Free banking; Option clause; Insolvency

BÉDARD Mathieu (2014) “Contagious Bank Failures in a Free Banking System: A Persistent Misunderstanding,” Journal des Économistes et des Études Humaines, Vol. 20, No. 1, p. 71–78.

Abstract: “This article compares financial contagion theories relevant to systemic risk in banking, namely counterparty contagion and informational contagion, and critically reviews the literature on past “Too Big to Fail” bankruptcies. Policy proposals to limit the adverse effects of contagion are dependent on which contagion theory best describes the phenomenon. Paradoxically, while counterparty contagion theory seems to dominate through the domino metaphor, empirical and theoretical literature gives little credence to it. In light of the literature reviewed, a better metaphor for financial contagion would be a single domino falling, prompting investors to question the solidity of similar dominos.”
JEL Classifications: G01, G33
Keywords: financial contagion; systemic risk; too big to fail; bailouts

BÉDARD Mathieu (2012) “Are Dominos a Good Metaphor for Systemic Risk in Banking?” International Journal of Business, Vol. 17, No. 4, p. 352–364.

Abstract: “A recurring citation in systemic risk literature reviews (P. Aghion, P. Bolton, and M. Dewatripont. 2000. “Contagious Bank Failures in a Free Banking System.” European Economic Review 44:713–18) offers a model where what they describe as a free banking system is vulnerable to contagious bank runs through clearinghouse loans. The paper ignores key contributions to both free banking and financial history literature, such that the paper is of little relevance to the understanding of the stability of both free banking systems and clearinghouse arrangements. Our criticism concentrates on the institutions of banking absent or misrepresented. It is argued that their conclusions are inapplicable to free banking.”
JEL Classifications: D02, G21, G3, N2
Keywords: financial stability; bank runs; systemic risk; clearinghouses; free banking

In Collection / Trade

BÉDARD Mathieu (2013) “A Hayekian Critique of the New Financial Institutions Insolvency Policies”, What Would Hayek Say Today (Really)?, 15–17, London: Legatum Institute.

BÉDARD Mathieu (2011) “Coût d’opportunité”, L’école autrichienne de A à Z, F. Facchini et A. Gentier Editeurs, Edition Blurb, San Francisco.

BÉDARD Mathieu (2011) “Dispersion de la connaissance”, L’école autrichienne de A à Z, F. Facchini et A. Gentier Editeurs, Edition Blurb, San Francisco.

BÉDARD Mathieu (2011) “Temps”, L’école autrichienne de A à Z, F. Facchini et A. Gentier Editeurs, Edition Blurb, San Francisco.

Working Papers

BÉDARD Mathieu (2014) “Robust Political Economy and the Insolvency Resolution of US Large Non-Bank Financial Institutions“, Available at SSRN.

Abstract: “This research applies the robust political economy framework to a comparative institutional analysis of US large non-bank financial institutions insolvency procedures. The regimes investigated will be the bailout of financial institutions, Dodd-Frank Act’s Orderly Liquidation Authority, both through procedures that follow original intent and through a ‘bail-in’ route, and 3 bankruptcy possibilities including Chapter 11, a so-called “Chapter 14,” and a mandatory auction mechanism used as a benchmark. We study the robustness of these regimes’ procedures through 5 criteria, both ex ante and ex post. These are the initiation of insolvency procedures, Too-big-to-fail moral hazard, the filtering mechanism, the allocation of resources, and their alleged systemic externalities containment abilities.”
JEL Classifications: G23, G33, H81, K23
Keywords: Bankruptcy, Insolvency, Dodd-Frank Act, Orderly Liquidation Authority, Comparative institutional analysis, Robust political economy

BÉDARD Mathieu and Vincent GELOSO (2014) “Free Banking and Economic Growth in Lower Canada, 1817-1851,” Under Review. Available at SSRN.

Abstract: “Generally, the historical literature presents the period from 1817 to 1851 in Lower Canada (modern day Québec) as one of negative economic growth. This period also coincides with the rise of free banking in the colony. In this paper we propose to study the effects of free banking on economic growth using theoretical and empirical validations to study the issue of whether or not economic growth was negative. First of all, using monetary identities, we propose that given the increase in the stock of money and the reduction in the general price level, there must have been a positive rate of economic growth during the period. We also provide complementary evidence drawn from wages that living standards were increasing. It was hence impossible for growth to have been negative. Secondly, we propose that the rise of privately issued paper money under free banking in the colony had the effect of mitigating the problem of the abundance of poor quality coins in circulation which resulted from legal tender legislation. It also had the effect of facilitating credit networks and exchange. We link this conclusion to the emergence of free banking which must have been an important contributing factor. Although we cannot perfectly quantity the effect of free banking on economic growth in Lower Canada, we can be certain that its effect on growth was clearly positive.”
JEL Classifications: N11, N21, E31
Keywords: Economic Growth, Free Banking, Price Level, Private Money

BÉDARD Mathieu (2013) “Informational Contagion and the Entrepreneurial Production of Informational Remedies“, CAE Working Papers no.96 Available at REPEC.

Abstract: “This article reassess informational financial contagion theory relevant to systemic risk in banking in the light of a coordination problem approach to economics, and then proceed to analyze and comment some related types of systemic risk policies. Typically, policies to limit or contain informational contagion place too much emphasis on disclosed explicit information search and neglect the circumstantial, ecological knowledge surrogates, stemming from the actions taken by market participants during informational contagion crises.”
JEL Classifications: D82, G01, G14, G33
Keywords: Financial Contagion; Bank runs; Information; Uncertainty

BÉDARD Mathieu and Antoine GENTIER. “Deposit Insurance and Coordination Failure: The Case of the 1837 Crisis in New York State and Massachusetts”, Unpublished Working paper, Aix-Marseille Université, CERGAM, November 2012.

In Preparation

BÉDARD Mathieu (2013) “Late Initiation of Bank Insolvency Procedures: Incentives, Information, and the Case for Bank Runs”, In preparation.

BÉDARD Mathieu (2012) “How Banks are Treated Differently”, In preparation.

In Press

BÉDARD Mathieu. “Perché la Francia si finanzia così a buon mercato”, Il Foglio [Italy], August 1st 2012, p. 1.

BÉDARD Mathieu. “A qui appartiennent les terres d’Afrique ?”, L’Echo [Belgique], 14 mai 2010, p. 14.

BÉDARD Mathieu. “Copenhague et les pauvres”, El Watan [Algérie], 18 déc. 2009.

BÉDARD Mathieu. “La dette publique n’est-elle jamais remboursée ?”, Le Monde [France], 30 mars 2009.

BÉDARD Mathieu. “Les consommateurs paient cher la réglementation des soldes”, Le Monde [France], February 3rd  2009.

BÉDARD Mathieu. “Le rôle économique des ‘parachutes dorés’”, Le Monde [France], November 27th 2008.

BÉDARD Mathieu. “Produits plus chers, plus légers ou modifiés : à vous de choisir !”, La Provence [France], October 8th 2008.

Advertisements