Type

Journal Article

Authors

John Cotter
Thomas Conlon

Subjects

Economics

Topics
banking crises anatomy european bank failure bank resolution impairment charges european commission bail in global financial crisis

Anatomy of a Bail-in (2014)

Abstract To mitigate potential contagion from future banking crises, the European Commission recently proposed a framework which would provide for the bail-in of bank creditors in the event of failure. In this study, we examine this framework retrospectively in the context of failed European banks during the global financial crisis. Empirical findings suggest that equity and subordinated bond holders would have been the main losers from the €535 billion impairment losses realized by failed European banks. Losses attributed to senior debt holders would, on aggregate, have been proportionally small, while no losses would have been imposed on depositors. Cross-country analysis, incorporating stress-tests, reveals a divergence of outcomes with subordinated debt holders wiped out in a number of countries, while senior debt holders of Greek, Austrian and Irish banks would have required bail-in.
Collections Ireland -> University College Dublin -> Institutes and Centres
Ireland -> University College Dublin -> Financial Mathematics Computation Cluster
Ireland -> University College Dublin -> FMC² Research Collection

Full list of authors on original publication

John Cotter, Thomas Conlon

Experts in our system

1
John Cotter
University College Dublin
Total Publications: 93
 
2
Thomas Conlon
University College Dublin
Total Publications: 9