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Conclusion

In: The New Bail-In Legislation

Author

Listed:
  • Angela Maria Maddaloni

    (European Central Bank)

  • Giulia Scardozzi

    (Roma Tre University)

Abstract

The change in bank resolution policy in Europe generated some “unintended” consequences on the financial system with both positive and negative connotations. The new European banking resolution regime fosters financial stability by increasing the banking sector’s resilience, necessary to withstand the occurrence of strong exogenous shocks like the COVID-19 pandemic. In this manuscript, we review some of the consequences of the transition from a bailout to bail-in resolution. We observe, firstly, a change in the bank liability mix toward cheaper sources of funding (such as customer deposits). Then, we analyze the reallocation of banks’ bonds holdings; before the approval of the new resolution regulation, mis-selling of risky bank bond was widespread, but after the implementation of the bail-in mechanism, there was a reallocation of bank bonds toward more sophisticated financial intermediaries. Finally, we analyze the market reactions at the bank resolution events.

Suggested Citation

  • Angela Maria Maddaloni & Giulia Scardozzi, 2022. "Conclusion," Palgrave Macmillan Studies in Banking and Financial Institutions, in: The New Bail-In Legislation, chapter 0, pages 79-82, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-030-87560-2_6
    DOI: 10.1007/978-3-030-87560-2_6
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