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State interventions to rescue banks during the global financial crisis

Author

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  • Abreu, José Filipe
  • Alves, Marta Guerra
  • Gulamhussen, Mohamed Azzim

Abstract

We model unique state interventions to rescue commercial banks during the 2008-09 global financial crisis with the complementary binary logistic model that accommodates their skewed distribution. Our findings show that large and illiquid banks, and banks from countries with weak regulations, and weak shareholder and creditor rights are more likely to receive state interventions. These findings remain robust to a restricted definition of state intervention, alternative measures of bank fundamentals, placebo estimations, counterfactual sampling with propensity scores, bank and country sample splits, and the standard logistic model. These bank and incremental country level predictors can help regulators and supervisors limit future state interventions.

Suggested Citation

  • Abreu, José Filipe & Alves, Marta Guerra & Gulamhussen, Mohamed Azzim, 2019. "State interventions to rescue banks during the global financial crisis," International Review of Economics & Finance, Elsevier, vol. 62(C), pages 213-229.
    • Handle: RePEc:eee:reveco:v:62:y:2019:i:c:p:213-229
    DOI: 10.1016/j.iref.2019.02.013
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    Citations

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    Cited by:

    1. Kočenda, Evžen & Iwasaki, Ichiro, 2020. "Bank survival in Central and Eastern Europe," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 860-878.
    2. de Haan, Jakob & Fang, Yi & Jing, Zhongbo, 2020. "Does the risk on banks’ balance sheets predict banking crises? New evidence for developing countries," International Review of Economics & Finance, Elsevier, vol. 68(C), pages 254-268.
    3. Joan Calzada & Xavier Fageda & Fernando Martínez-Santos, 2023. "Mergers and bank branches: two decades of evidence from the USA," Empirical Economics, Springer, vol. 64(5), pages 2411-2447, May.

    More about this item

    Keywords

    Financial crisis; Banks; Government support;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

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