The New Bail-In Legislation

Financial stability is a pillar of well-functioning financial markets. After the last financial crisis, European policymakers harmonised banking regulation and revised the framework of banking resolution. The introduction of the bail-in legislation is a natural experiment to improve the understanding of banking resolution and how it affected the funding strategies of banks. This book assesses whether financial stability has been strengthened by the change in banks' resolution policy with a focus on the bail-in. The book shows how banks changed their funding strategies, shrank their balance-sheets and relied more on deposits. The book will discuss inter-alia the mis-selling of bonds, which happened during 2012-2013, analysing whether the bond allocation changed after the bail-in launch. It discusses how the bail-in mechanism was deemed credible by equity holders and argues that the European case would have useful implications for third countries. Finally, the book relates this discussion to the possible collateral effects generated by the new resolution policy during and after the COVID-19 crisis, which will be of particular interest to researchers and policymakers in banking and financial institutions.

Analyses the effects of the new resolution regime in European banking with the introduction of the bail-in tool Contains analysis using unique central bank databases and of risk allocation Offers a comprehensive analysis of the effects caused by funding, risk allocation and market reactions

Autorentext

Angela Maddaloni is Head of the Financial Intermediation Research Section in the Directorate General Research of the European Central Bank, where she has worked since 2001. Her research and policy interest cover a wide range of topics related to financial intermediation, macro-financial linkages, the transmission of monetary policy, credit and business cycles and the impact of financial regulation. Giulia Scardozzi is a temporary research fellow at University of Roma TRE, Italy. She received her PhD in December 2020 at University of Roma TorVergta, Italy.

Inhalt
Chapter 1: The new resolution framework.- Chapter 2: Bank funding strategies after the bail-in announcement.- Chapter 3: Risk Allocation and bond misselling after the bail-in directive.- Chapter 4: Bond allocation after the bank resolution cases.- Chapter 5: Market reaction at the resolution events.