Ethics of bank failures
luck egalitarianism versus the right for stability
DOI:
https://doi.org/10.22370/rhv2025iss29.4564Keywords:
Bank failures, financial crises, non-domination, the paradox of luck egalitarianism, right to stabilityAbstract
This paper introduces an existing tension in the literature to the question of who should bear the costs of bank failures. On the one hand, that these costs should be borne by banks, since they should bear responsibility for their own risk-taking. On the other hand, that the government should bailout banks, since it should maintain stability. The paper argues that focusing on non-domination and on a right to health offers a way out of the tension. The paper suggests that the government should let banks go bankrupt, unless the bankruptcy of a specific bank leads to a financial crisis.
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