Eurozone bank resolution and Bail-In-Intervention, triggers and writedowns
|Title:||Eurozone bank resolution and Bail-In-Intervention, triggers and writedowns||Authors:||Conlon, Thomas
|Permanent link:||http://hdl.handle.net/10197/6486||Date:||5-Feb-2015||Online since:||2015-04-14T12:05:33Z||Abstract:||The European Union has recently introduced the Single Resolution Mechanism (SRM) to provide a consistent set of rules concerning Eurozone bank resolution. In this study, we retrospectively examine the implications of the SRM for Eurozone banks during the global financial crisis. Empirical results indicate that large, systemically important Eurozone banks would have exclusively required equity writedowns to cover impairment losses. However, to ensure adequate capitalization post bail-in, the majority of large, listed banks would have required conversion to equity for all subordinated and some senior debt creditors. Depositors would not have experienced writedowns in any of the banks examined. Given the subjective nature of resolution triggers outlined in the SRM, we also study the potential benefits of market and balance sheet dependent triggers. While our findings suggest some weak evidence of a capacity to differentiate between failed and surviving banks, the results are indicative of the difficulties in mandating predefined quantitative resolution triggers.||Funding Details:||Science Foundation Ireland||Type of material:||Working Paper||Publisher:||University College Dublin. Geary Institute||Start page:||1||End page:||33||Series/Report no.:||UCD Geary Institute Discussion Paper Series; WP2015/01||Copyright (published version):||2015 the authors||Keywords:||Bank Resolution and Recovery directive (BRRD); Single Resolution Mechanism (SRM); Global financial crisis||Other versions:||http://www.ucd.ie/geary/static/publications/workingpapers/gearywp201501.pdf||Language:||en||Status of Item:||Not peer reviewed|
|Appears in Collections:||Geary Institute Working Papers|
Business Research Collection
Show full item record
Page view(s) 5071
This item is available under the Attribution-NonCommercial-NoDerivs 3.0 Ireland. No item may be reproduced for commercial purposes. For other possible restrictions on use please refer to the publisher's URL where this is made available, or to notes contained in the item itself. Other terms may apply.