IDEAS home Printed from https://ideas.repec.org/p/zbw/cawmdp/22.html
   My bibliography  Save this paper

Bad banks: The case of Germany

Author

Listed:
  • Ilgmann, Cordelius
  • van Suntum, Ulrich

Abstract

This paper discusses the instrument of equalisation claims, which has successfully been used in two previous German debt crises as a method for stabilizing the balance sheets of financial institutions. A modern version of this method would swap temporarily illiquid assets for government bonds with open maturit , in order to avoid the problem of evaluating the toxic assets in advance. Not only will this method save taxpayers' money, but it also upholds the market principle of liability, thereby avoiding incentives for inefficient risk-prone behaviour in the financial sector. The current German bad bank approach principally follows this approach, but severely suffers from unnecessary complexity and voluntary participation.

Suggested Citation

  • Ilgmann, Cordelius & van Suntum, Ulrich, 2009. "Bad banks: The case of Germany," CAWM Discussion Papers 22, University of Münster, Münster Center for Economic Policy (MEP).
    • Handle: RePEc:zbw:cawmdp:22
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/51266/1/671789066.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Felton, Andrew & Reinhart, Carmen M. (ed.), 2009. "The First Global Financial Crisis of the 21st Century Part II: June–December, 2008," Vox eBooks, Centre for Economic Policy Research, number p199.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tanja Markovic-Hribernik & Matej Tomec, 2015. "Bad Bank And Other Possible Banks’ Rescuing Models – The Case Of Slovenia," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 128-141, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jan Streeck & Quirin Dammerer & Dominik Wiedenhofer & Fridolin Krausmann, 2021. "The role of socio‐economic material stocks for natural resource use in the United States of America from 1870 to 2100," Journal of Industrial Ecology, Yale University, vol. 25(6), pages 1486-1502, December.
    2. Wim Naudé, 2009. "The Financial Crisis of 2008 and the Developing Countries," WIDER Working Paper Series DP2009-01, World Institute for Development Economic Research (UNU-WIDER).
    3. San Martín Albizuri, Nerea & Rodríguez Castellanos, Arturo, 2008. "¿Reflejan los índices de riesgo país las variables relevantes en el desencadenamiento de las crisis externas? Un análisis sobre el periodo 1994-2001," Cuadernos de Gestión, Universidad del País Vasco - Instituto de Economía Aplicada a la Empresa (IEAE).
    4. Andrew K. Rose & Mark M. Spiegel, 2010. "Cross‐Country Causes And Consequences Of The 2008 Crisis: International Linkages And American Exposure," Pacific Economic Review, Wiley Blackwell, vol. 15(3), pages 340-363, August.
    5. Hyun, Jung-Soon & Rhee, Byung-Kun, 2011. "Bank capital regulation and credit supply," Journal of Banking & Finance, Elsevier, vol. 35(2), pages 323-330, February.
    6. José De Gregorio, 2009. "Chile and the Global Recession of 2009," Economic Policy Papers Central Bank of Chile 30, Central Bank of Chile.
    7. Hans-Werner Sinn & John Hassler & Gilles Saint-Paul & Giancarlo Corsetti & Michael P. Devereux & Tim Jenkinson & Jan-Egbert Sturm & Xavier Vives, 2009. "Chapter 2: The Financial Crisis," EEAG Report on the European Economy, CESifo, vol. 0, pages 59-122, February.
    8. Johannes Hörner & Nicolas S Lambert, 2021. "Motivational Ratings [Toward the Next Generation of Recommender Systems: A Survey of the State-of-the-Art and Possible Extensions]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(4), pages 1892-1935.
    9. Alan M. Taylor, 2015. "Credit, Financial Stability, and the Macroeconomy," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 309-339, August.
    10. Samitas, Aristeidis & Polyzos, Stathis, 2016. "Freeing Greece from capital controls: Were the restrictions enforced in time?," Research in International Business and Finance, Elsevier, vol. 37(C), pages 196-213.
    11. Gries Thomas & Naude Wim, 2011. "Entrepreneurship, Structural Change and a Global Economic Crisis," Entrepreneurship Research Journal, De Gruyter, vol. 1(3), pages 1-43, July.
    12. Massimo FLORIO, 2012. "The real roots of the great recession: unsustainable income distribution," Departmental Working Papers 2012-01, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    13. Ghassan Omet, 2011. "Stock Market Liquidity: Comparative Analysis of The Abu Dhabi Stock Exchange and Dubai Financial Market," Working Papers 655, Economic Research Forum, revised 12 Jan 2011.
    14. Viral V. Acharya & Thomas Cooley & Matthew Richardson & Ingo Walter, 2011. "Market Failures and Regulatory Failures : Lessons from Past and Present Financial Crises," Finance Working Papers 23273, East Asian Bureau of Economic Research.
    15. Girardi, Daniele, 2012. "Il settore delle costruzioni in Italia tra crisi e trasformazione [The construction sector in Italy, crisis and change]," MPRA Paper 49901, University Library of Munich, Germany.
    16. Thorvald Grung Moe, 2012. "Shadow Banking and the Limits of Central Bank Liquidity Support: How to Achieve a Better Balance between Global and Official Liquidity," Economics Working Paper Archive wp_712, Levy Economics Institute.
    17. Laetitia Lepetit & Amine Tarazi & Nadia Zedek, 2012. "Ultimate Ownership Structure and Bank Regulatory Capital Adjustment: Evidence from European Commercial Banks," Working Papers hal-00918579, HAL.
    18. Hale Balseven, 2016. "The Political Economy of Financial Regulation Policies Following the Global Crisis," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 607-616.
    19. repec:zbw:bofrdp:2014_018 is not listed on IDEAS
    20. Gurvich, E. & Prilepskiy, I., 2010. "What Determined the Depth of Recession?," Journal of the New Economic Association, New Economic Association, issue 8, pages 55-79.
    21. Azra Hadziahmetovic & Jasmin Halebic & Nerma Colakovic–Prguda, 2018. "Economic Crisis: Challenge For Economic Theory And Policy," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 6(4), pages 48-55.

    More about this item

    Keywords

    Financial Crisis; Bad Banks; German History; equalisation claims;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G01 - Financial Economics - - General - - - Financial Crises
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:cawmdp:22. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/camuede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.