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...

Economists have dominated U.S. scholarship about the S&L debacle and they have universally viewed the regulatory response as horrific. This paper argues that the conventional economic wisdom is badly flawed. The U.S. regulatory response to the debacle was disastrous – when economists shaped it...

In this paper, I suggest that the regulation of the financial system, especially if the aim is to prevent financial crises, should be focused on dealing with the consequences of the crises, not on trying to avoid their causes, although it may seem counterintuitive at first sight. Contrary to the...

With the proposals of the United Kingdom's Independent Commission on Banking (now enacted in legislation), the “ring-fencing” of core banking functions and their legal and commercial insulation against the risks emanating from investment banking has attracted wide-spread attention in both...

In August 2007 the United Kingdom experienced its first bank run in over 140 years. Although Northern Rock was not a particularly large bank (it was at the time ranked 7th in terms of assets) it was nevertheless a significant retail bank and a substantial mortgage lender. In fact, ten years...

Systemic risk - the possibility that an individual firm's failure will result in broad damages to the economy as a whole - is the epitome of financial crisis. Bailouts of troubled firms have long been the standard response to systemic risk. Yet, bailouts suffer from problems of political...

The present study undertakes an overview of the role of deposit guarantee schemes (DGSs) within the banking crisis management framework. It is structured in four Section:Section 1 discusses the policy objectives of DGSs, namely the protection of depositors and the contribution to the stability...