ROBUSTNESS OF THE BANK RESOLUTION FRAMEWORK IN THE EUROPEAN UNION
Journal Title: Copernican Journal of Finance & Accounting - Year 2017, Vol 6, Issue 1
Abstract
The purpose of this article is to identify the key elements of resolution framework under the Single Resolution Mechanism (SRM) and to assess the robustness of the bank resolution framework in the European Union (EU). The 2007–2009 global financial crisis exposed number of weaknesses in the banking sector. It also showed the unpreparedness of the European governments in dealing with failing banks and the possible negative consequences it can have on the wider economy. As result, in order to save the economy from even deeper crisis, governments in many European countries had no other choice than to bail-out the “too-big-to-fail” banks using taxpayers’ money. Post-crisis, banking regulators recognised the need for a broader reform and creation of a formalized resolution framework which would allow for efficient resolution of troubled banks with no or limited use of public funds. The resolution proceedings are complex procedures, which need to balance the interest of the different bank stakeholders such as: shareholders, debt holders, regulatory and supervisory authorities, governments and many others. In the EU, the SRM was put in place together with Bank Recovery and Resolution Directive (BRRD) to address the issues identified during the crisis. This article is an attempt to demonstrate that the new European resolution framework contains provisions and tools that may limit the use of public funds in resolution of failing banks. The outcome provides a framework for further research focused on better understanding of the trade-offs in resolution framework and measuring the efficiency of bank resolution in the EU.
Authors and Affiliations
Jan Pys
Keywords
Related Articles
- EP ID EP192768
- DOI 10.12775/CJFA.2017.005
- Views 68
- Downloads 0
SUSTAINABILITY, CONSUMPTION, AND TECHNOLOGY
Sustainability of current economic system is analyzed in the face of growing population, accelerating exploitation of limited natural resources, and advances in technology. A Cobb-Douglas type of production function is a...
THE TENDENCY OF HOUSEHOLDS TO INVEST IN AN ECOLOGICAL MODERNIZATION OF THE UTILIZED HEATING SOURCES
The aim of the article is to determine the impact of economic aspects on the decision-making process on modernization of heating sources used by households in the largest cities of the Kuyavian-Pomeranian Voivodeship. Ex...
VARIABILITY OF ACCOUNTING POLICIES – ADVANTAGES AND DISADVANTAGES
There are several provisions of accounting policy, which are not regulated by the legislation of the Republic of Latvia. As a result, companies are free to develop and adopt recognition criteria and the methods of evalua...
THE ROLE OF CASHLESS TRANSACTIONS IN THE PROCESS OF LIMITING THE SCALE OF THE SHADOW ECONOMY
This article presents the existing state of cashless transactions in Poland, taking into consideration the network of card acceptance among enterprises. Even though in recent years cashless transactions has been dynamica...
THE EFFECT OF SOCIAL CAPITAL ON OPERATIONAL PERFORMANCE: RESEARCH IN BANKING SECTOR IN ERBIL
Social capital as a field of study has grown with many contributions from different fields. Yet, the gap within the literature regarding different contexts has inspired researchers to look for further explanations about...