Evaluating the effectiveness of the new EU bank regulatory framework: A farewell to bail-out?

Benczúr, Péter; Cannas, Giuseppina; Cariboni, Jessica; Girolamo, Francesca Di; Maccaferri, Sara; Giudici, Marco Petracco

doi:10.1016/j.jfs.2016.03.001

Cited by 46 publications

(30 citation statements)

References 12 publications

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“…closely interconnected banking systems (Deutsche Bank, 2014). Bank resolutions were costly, indeed, during the 2008-2012 period, with public interventions amounting to roughly 600 billion euros (excluding guarantee schemes), that is, 4.6% of the European gross domestic product (GDP) in 2012 (Benczur et al, 2017). More importantly, because taxpayers' money was used to manage the crisis of (mostly private) banks, public bailouts were unsustainable from both a financial and a political perspective.…”

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confidence: 99%

Bail‐in rules and the pricing of Italian bank bonds

Crespi

Giacomini

Mascia

2019

Euro Fin Management

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We analyze whether the introduction of the bail‐in tool in January 2016 affected the pricing of Italian bank bonds. Using a unique dataset of 1,798 fixed‐rate bonds issued during the period 2013–2016, we find an increase of the spread at issuance of bail‐inable bonds compared to non‐bail‐inable bonds. This increase also depends on the intrinsic characteristics of each bank. Large institutions, banks with lower ratings, profitability, capitalization, and higher liquidity faced a higher cost of issuing bail‐inable bonds. Overall, our results seem to support the hypothesis of an improved market discipline for the bank bond primary market.

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confidence: 99%

Bail‐in rules and the pricing of Italian bank bonds

Crespi

Giacomini

Mascia

2019

Euro Fin Management

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“…These new developments in banking rules were also followed by academics with the release of several papers on the topic during the early days of this new regulatory framework. This proves the efforts and the paramount importance that this topic represents for academic researchers [55,56]. However, as this work points out, the current status of the academic literature on the topic is neither as sizeable nor as deep as it should be in order to fully understand the strengths and potential side effects of the new banking resolution framework.…”

Section: Discussionmentioning

confidence: 97%

Bail-In: A Sustainable Mechanism for Rescuing Banks

2018

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Until the Great Recession, rescuing banks with taxpayers’ money had been the preferred way to deal with banking crises. The dramatic effects of these practices on the real economy highlighted that bailouts are not a sustainable method to resolve troubled banks going forward. As a result, a new regulatory framework has been proposed, forcing the financial industry to move from “bailout” to “bail-in.” Understanding the implications of such a change is key to ensuring the success of these new banking rules. This article aims to build up a comprehensive and unbiased set of research articles in order to draw conclusions about the current status of the academic literature in the field of capital and loss absorption requirements. A research agenda on the topic is also proposed. The methodological approach undertaken is based on ProKnow-C (Knowledge Development Process-Constructivist). We also contribute to the development of Proknow-C methodology by adding a cross-reference extension to the original framework. The results of our analysis point out that further research has to be undertaken on the subject of loss absorption requirements.

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“…The leave-one-out model allows measuring the systemic risk of commercial banks on the basis of the subjacent SYMBOL model, proposed by De Lisa et al [38], initially used to simulate the loss distribution of the deposit insurance scheme, and later adopted by the European Commission to evaluate bank-related policies [43][44][45] and for assessing the possible effects of banking crises on public finances stability [46][47][48][49][50].…”

Section: Methodsmentioning

confidence: 99%

Analysis of China Commercial Banks’ Systemic Risk Sustainability through the Leave-One-Out Approach

2019

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One of the main issues in the recent Chinese financial reform is aimed at effectively measuring systemic risk and taking appropriate measures to ensure its sustainability and prevent new crises. In this paper, we firstly introduced the present macro-prudential policies implied in China and pointed out the existing problems. Secondly, we analyzed the banks’ assets riskiness and the banks’ probability to default, then, by means of a leave-one-out model, we measured each commercial bank systemic risk contribution. Thirdly, based on comprehensive empirical results and theoretical analysis, we provided some references for macro-prudential regulation and supervision. Results show that systemic risk is increasing in 2013–2017, in particular with reference to contagion risk, with a specific concentration within joint-stock commercial banks, suggesting a specific attention of regulators and supervisors for this category.

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Evaluating the effectiveness of the new EU bank regulatory framework: A farewell to bail-out?

Cited by 46 publications

References 12 publications

Bail‐in rules and the pricing of Italian bank bonds

Bail‐in rules and the pricing of Italian bank bonds

Bail-In: A Sustainable Mechanism for Rescuing Banks

Analysis of China Commercial Banks’ Systemic Risk Sustainability through the Leave-One-Out Approach

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