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European Banking Recovery and Resolution Directive: Potential Impacts on European Systemic Important Financial Institutions

International Journal of Finance & Banking Studies

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Title European Banking Recovery and Resolution Directive: Potential Impacts on European Systemic Important Financial Institutions
 
Creator Akinsoyinu, Clements; Cracow University of Economics
 
Subject Banking
bailouts, implicit guarantee, systemic risk, bail-in, asset-separation, too-big-to- fail, bridge bank, financial crisis, bank recovery, resolution
 
Description The great recession heralded in by the subprime mortgage crisis, took a dramatic turn for worse as a result of collapse of the Lehman Brothers bank in September 2008. The crisis deemed to be the most devastating after the Great Depression of 1929, had a debilitating effect on world economies, developing and advanced alike.  The extent of its devastation which  is still being felt in Europe and many parts of the globe reminds us the interconnectedness of financial institutions, particularly those tagged TBTF or SIFIs. Policy makers scrambled to curtail the ugly effect of the crisis by rescuing the SIFIs within their jurisdiction largely through bailout mechanism and provision of implicit guarantee for the debts of failing/failed institutions. As soon as the tide is stemmed, they cast their gaze on new crisis resolution and recovery measures that could rein in systemic risks associated with SIFIs, prevent future crises and reduce the concomitant moral hazards in the current resolution measures. This paper assesses ex ante the potential impact of implementing the new Banking recovery and resolution directives on Europe’s TBTF banksThe great recession heralded in by the subprime mortgage crisis, took a dramatic turn for worse as a result of collapse of the Lehman Brothers bank in September 2008. The crisis deemed to be the most devastating after the Great Depression of 1929, had a debilitating effect on world economies, developing and advanced alike.  The extent of its devastation which  is still being felt in Europe and many parts of the globe reminds us the interconnectedness of financial institutions, particularly those tagged TBTF or SIFIs. Policy makers scrambled to curtail the ugly effect of the crisis by rescuing the SIFIs within their jurisdiction largely through bailout mechanism and provision of implicit guarantee for the debts of failing/failed institutions. As soon as the tide is stemmed, they cast their gaze on new crisis resolution and recovery measures that could rein in systemic risks associated with SIFIs, prevent future crises and reduce the concomitant moral hazards in the current resolution measures. This paper assesses ex ante the potential impact of implementing the new Banking recovery and resolution directives on Europe’s TBTF banks
 
Publisher SSBFNET
 
Contributor —
 
Date 2015-09-21
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/407
 
Source International Journal of Finance & Banking Studies (ISSN: 2147- 4486); Vol 4, No 3 (2015): July; 11-24
2147-4486
 
Language eng
 
Relation http://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/407/421
 
Rights Copyright (c) 2015 International Journal of Finance & Banking Studies (ISSN: 2147- 4486)
http://creativecommons.org/licenses/by/4.0