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Anatomy of a Bail-In
Author(s)
Date Issued
2014-03-04
Date Available
2014-05-26T15:00:22Z
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 e535 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.
Type of Material
Working Paper
Publisher
University College Dublin. Geary Institute
Series
UCD Geary Institute Discussion Paper Series
WP2014/05
Web versions
Language
English
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License
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