End of the sovereign-bank doom loop in the European Union? : the bank recovery and resolution directive

by Giovanni Covi and Ulrich Eydam

In this paper we examine the relationship between the default risk of banks and sovereigns, i.e. the 'doom-loop'. Specifically we try to assess the effectiveness of the implementation of the new recovery and resolution framework. We use a panel with daily data on European banks and sovereigns ranging from 2008 to 2016. We find that there was a pronounced feedback loop between banks and sovereigns from 2008 to 2014. However, this feedback loop seems to have disappeared after the implementation of the new regulatory framework. This finding is robust across several specifications.

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Year of publication:	May 2016
Authors:	Covi, Giovanni ; Eydam, Ulrich
Publisher:	Kiel, Germany : Kiel Institute for the World Economy
Subject:	Financial Stability \| Sovereign Bailout \| Doom Loop \| Bank Recovery and Resolution Directive \| European Banking Union \| EU-Staaten \| EU countries \| Bankenregulierung \| Bank regulation \| Finanzkrise \| Financial crisis \| Bankgeschäft \| Banking services \| Bankenkrise \| Banking crisis \| Bankinsolvenz \| Bank failure

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Extent:	1 Online-Ressource (circa 29 Seiten) Illustrationen
Series:	Kiel advanced studies working papers. - Kiel : [Verlag nicht ermittelbar], ZDB-ID 2326968-6. - Vol. no. 468
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Arbeitspapier ; Working Paper ; Graue Literatur ; Non-commercial literature
Language:	English
Other identifiers:	hdl:10419/142155 [Handle]
Classification:	E58 - Central Banks and Their Policies ; G01 - Financial Crises ; G18 - Government Policy and Regulation ; L51 - Economics of Regulation
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10011482170