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This is the accepted version of the paper.This version of the publication may differ from the final published version. Permanent repository link AbstractThe degree to which governments intervene to contain financial crises varies considerably. We aim to understand why policymakers choose the level of intervention they do to contain financial shocks.In particular, we want to understand why policymakers may choose policies that create outcomes they do not want. We focus on a defining feature of financial crisis policymaking that has been largely unaddressed in the literature on policy responses to crises: policymakers lack good information about the health of their banking systems. So, they rely on their bureaucrats and other actors for necessary information. However, information providers may have di↵erent policy preferences. To understand the interactions between these actors and the implications for policy choice, we advance a signalling game of financial crisis containment. We use comparative statics and a case study of the recent Irish crisis to demonstrate how information asymmetries can have a significant impact on bailout choices.

This is the accepted version of the paper.This version of the publication may differ from the final published version. Permanent repository link AbstractThe degree to which governments intervene to contain financial crises varies considerably. We aim to understand why policymakers choose the level of intervention they do to contain financial shocks.In particular, we want to understand why policymakers may choose policies that create outcomes they do not want. We focus on a defining feature of financial crisis policymaking that has been largely unaddressed in the literature on policy responses to crises: policymakers lack good information about the health of their banking systems. So, they rely on their bureaucrats and other actors for necessary information. However, information providers may have di↵erent policy preferences. To understand the interactions between these actors and the implications for policy choice, we advance a signalling game of financial crisis containment. We use comparative statics and a case study of the recent Irish crisis to demonstrate how information asymmetries can have a significant impact on bailout choices.