Citation

Discussion Paper Details

Please find the details for DP14724 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Bank Resolution Regimes and Systemic Risk

Author(s): Thorsten Beck, Deyan Radev and Isabel Schnabel

Publication Date: May 2020

Keyword(s): bail-in, Bank resolution regimes and systemic risk

Programme Area(s): Financial Economics

Abstract: We assess the ability of bank resolution frameworks to deal with systemic banking fragility. Using a novel and detailed database on bank resolution regimes in 22 member countries of the Financial Stability Board, we show that systemic risk, as measured by â?³CoVaR, increases more for banks in countries with more comprehensive bank resolution frameworks after negative system-wide shocks, such as Lehman Brothers' default, while it decreases more after positive system-wide shocks, such as Mario Draghi's "whatever it takes'' speech. These results suggest that more comprehensive bank resolution may exacerbate the effect of system-wide shocks and should not be solely relied on in cases of systemic distress.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14724

Bibliographic Reference

Beck, T, Radev, D and Schnabel, I. 2020. 'Bank Resolution Regimes and Systemic Risk'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14724