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The Effects of the New European Bank Resolution Framework

Author

Listed:
  • Angela Maddaloni
  • Giulia Scardozzi

Abstract

Changes in the bank resolution policy in the European Union (EU) induced some changes for the EU banking system. We discuss two main implications of the implementation of the bail-in resolution tool. First, we observe a general shift in the banks' liability structure toward less expensive sources of funding (e.g., customer deposits). We also examine the reallocation of banks' bond holdings across different investors. Mis-selling of risky bank bonds was common prior to the approval of the new resolution regulation. However, after the implementation of the bail-in mechanism, bank bonds have been reallocated more towards sophisticated financial intermediaries.

Suggested Citation

  • Angela Maddaloni & Giulia Scardozzi, 2023. "The Effects of the New European Bank Resolution Framework," Review of Corporate Finance, now publishers, vol. 3(3), pages 451-480, July.
    • Handle: RePEc:now:jnlrcf:114.00000047
    DOI: 10.1561/114.00000047
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    Cited by:

    1. Douglas Cumming & Zachary Glatzer & Omrane Guedhami, 2023. "Institutions, digital assets, and implications for economic and financial performance," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(3), pages 487-513, September.

    More about this item

    Keywords

    Bail-in; EBU; banking resolution;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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