To study whether banks retain their lessons from the experience of a severe financial crisis, we examine the effects of the systemic banking crisis of the early 1990s in three Nordic countries (Finland, Norway, and Sweden). While this crisis largely bypassed the rest of Europe, we hypothesize...

During the 2008 financial crisis, the legislators faced the challenge to sanitise the banking sectors, and in some case to remove banks from the landscape. In order to workout the toxic portfolios, the Parliaments created "bad banks". This articles analyses these so-called bad banks regarding...

The analysis of the new system of bank resolution shows the extreme complexity of the mechanism and the variety and impact of the tools available. The BRRD organises the articulation of public tasks for banking crises in three different phases: the ordinary course of business, the early...

I exploit the price differential of credit default swap (CDS) contracts written on debts with different levels of seniority to measure the implicit government guarantees enjoyed by European financial institutions from 2005 to 2013. I determine that the aggregate guarantee increased substantially...

We analyze the link between banking sector quality and sovereign risk in the whole European Union over 1999–2014. We employ four different indicators of sovereign risk (including market- and opinion-based assessments), a rich set of theoretically and empirically motivated banking sector...

This study attempts to identify and trace inter-linkages between sovereign and banking risk in the euro area. To this end, we use an indicator of banking risk in each country based on the Contingent Claim Analysis literature, and 10-year government yield spreads over Germany as a measure of...

This chapter argues that the work of the European Banking Union remains incomplete in one important respect, the structural re-organization of large European financial firms that would make “resolution” of a systemically important financial firm a credible alternative to bail-out or some...

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 this paper, I use a two-country model to investigate the incentives which lead one country to take charge of another country's debt. I show that, when direct transfers to residents cannot be perfectly targeted, the first country can be better off honoring the second country's liabilities,...