Governments as Investors of Last Resort, Credit Crisis Comparative Case Studies

Theoretical Inquiries in Law, 2012

ECGI - Law Working Paper No. 187/2012

24 Pages Posted: 31 Jan 2012 Last revised: 14 Mar 2012

See all articles by Gerard Hertig

Gerard Hertig

ETH Zurich; European Corporate Governance Institute (ECGI)

Date Written: January 28, 2012


Governments in Europe and the US have recently acquired significant stakes in a number of financial institutions, raising fears that they will use their investments to pursue interventionist goals. The comparative analysis of 16 major bail-outs in Belgium, Germany, France, Ireland, Switzerland, the UK and the US provides evidence to the contrary. Fiscal and political considerations have prompted governments to generally avoid common stock investments, limit direct managerial involvement and favor early exits. While this investment strategy may prove detrimental to other stakeholders, it resembles the approach distressed asset investors would adopt under the circumstances.

Keywords: Bank bail-out, bank governance, government ownership, state aid, resolution, restructuring

JEL Classification: G28, G32, H81, K22

Suggested Citation

Hertig, Gerard, Governments as Investors of Last Resort, Credit Crisis Comparative Case Studies (January 28, 2012). Theoretical Inquiries in Law, 2012, ECGI - Law Working Paper No. 187/2012, Available at SSRN: or

Gerard Hertig (Contact Author)

ETH Zurich ( email )

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CH-8092 Zurich


European Corporate Governance Institute (ECGI)

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