Efficiency Gains of a European Banking Union
Duisenberg school of finance - Tinbergen Institute Discussion Paper TI 13-26/IV/DSF 51
25 Pages Posted: 13 Feb 2013
Date Written: February 11, 2013
Abstract
An anticipated benefit of the prospective European Banking Union is stronger supervision of European banks. Another benefit would be enhanced resolution of banks in distress. While national governments confine themselves to the domestic effects of a banking failure, a European Resolution Authority would follow a supranational approach, under which domestic and cross-border effects within Europe are incorporated. Using a model of recapitalising banks, this paper develops indicators to measure the efficiency improvement of resolution. Next, these efficiency indicators are applied to the hypothetical resolution of the top 25 European banks, which count for the vast majority of cross-border banking in Europe. Our cost-benefit analysis indicates that the UK, Spain, Sweden, and the Netherlands are the main beneficiaries and thus have the largest economic incentives to join Europe’s Banking Union.
Keywords: Financial Stability, Financial Crises, Public Good, International Banking
JEL Classification: F33, G01, G28, H41
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Collective Moral Hazard, Maturity Mismatch and Systemic Bailouts
By Emmanuel Farhi and Jean Tirole
-
Collective Moral Hazard, Maturity Mismatch and Systemic Bailouts
By Emmanuel Farhi and Jean Tirole
-
Will the U.S. Bank Recapitalization Succeed? Eight Lessons from Japan
By Takeo Hoshi and Anil K. Kashyap
-
By Thomas Philippon and Philipp Schnabl
-
By Thomas Philippon and Philipp Schnabl
-
By Thomas Philippon and Philipp Schnabl
-
By Thomas Philippon and Philipp Schnabl
-
By Dinara Bayazitova and Anil Shivdasani
-
On the Real Effects of Bank Bailouts: Micro-Evidence from Japan