Using a dynamic game model of incomplete information, this paper discusses the relations among financial crisis, regulator＇s soft budget constraints and banker＇s moral hazard. We find that： the more severe the financial crises will be, the greater soft budget constrained to regulators, so the mitigating soft budget constraints is the most important regulatory policies of reducing financial crises; a random creative ambiguity for regulators to offer bailout or rescue plans may mitigate the expectation of soft budget constraints for financial institutions; with the ban...
