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
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Creator |
Akinsoyinu, Clements; Cracow University of Economics
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Subject |
Banking
bailouts, implicit guarantee, systemic risk, bail-in, asset-separation, too-big-to- fail, bridge bank, financial crisis, bank recovery, resolution |
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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
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Publisher |
SSBFNET
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Contributor |
—
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Date |
2015-09-21
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Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion Peer-reviewed Article |
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Format |
application/pdf
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Identifier |
http://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/407
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Source |
International Journal of Finance & Banking Studies (ISSN: 2147- 4486); Vol 4, No 3 (2015): July; 11-24
2147-4486 |
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Language |
eng
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Relation |
http://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/407/421
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Rights |
Copyright (c) 2015 International Journal of Finance & Banking Studies (ISSN: 2147- 4486)
http://creativecommons.org/licenses/by/4.0 |
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