Arbeitspapier

Can European Bank Bailouts work?

Cross-border banking needs cross-border recapitalisation mechanisms. Each mechanism, however, suffers from the financial trilemma, which is that cross-border banking, national financial autonomy and financial stability are incompatible. In this paper, we study the efficiency of different burden sharing agreements for the recapitalisation of the 30 largest banks in Europe. We consider bank bailouts for these banks in a simulation framework with stochastic country-specific bailout benefits. Among the burden sharing rules, we find that the majority and qualified-majority voting rules come close to the efficiency of a bailout mechanism with a supranational authority. Even a unanimous voting rule works better than home-country bailouts, which are very inefficient.

Language
Englisch

Bibliographic citation
Series: Tinbergen Institute Discussion Paper ; No. 12-111/IV/DSF43

Classification
Wirtschaft
International Monetary Arrangements and Institutions
Financial Institutions and Services: Government Policy and Regulation
Public Goods
Subject
Financial Stability
Public Good
International Monetary Arrangements
International
Bankgeschäft
Internationale Bank
Refinanzierung
Finanzkrise
Schuldenübernahme
Wirkungsanalyse
Europa

Event
Geistige Schöpfung
(who)
Schoenmaker, Dirk
Siegmann, Arjen
Event
Veröffentlichung
(who)
Tinbergen Institute
(where)
Amsterdam and Rotterdam
(when)
2012

Handle
Last update
20.09.2024, 8:23 AM CEST

Data provider

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Object type

  • Arbeitspapier

Associated

  • Schoenmaker, Dirk
  • Siegmann, Arjen
  • Tinbergen Institute

Time of origin

  • 2012

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