2022/01/01 by Michela Altieri, Deyan Radev
Economics, Econometrics and Finance · #Arbitrage #Banking stability, regulation, efficiency #Business #Credit Risk and Financial Regulations #Economics #Finance #Financial crisis #Financial system #Global Financial Crisis and Policies #Systemic risk
paper · doi:10.1016/j.jimonfin.2026.103591
openalex publication_date 2022/01/01 · openalex created_date 2025/10/10 · crossref created 2026/05/09 · crossref issued 2026/08/01 · crossref published 2026/08/01 · crossref published-print 2026/08/01 · openalex updated_date 2026/08/04 · crossref deposited 2026/08/06 · crossref indexed 2026/08/06
Are bank resolution regimes effective enough to improve financial stability? We look at the effect of the new bank resolution reforms on the systemic risk of big financial conglomerates. We find that in developed countries, parent banks in a stricter resolution regime have lower systemic risk contributions, compared to their foreign subsidiaries. The opposite is true for parent banks from developing countries. We explain these results as financial conglomerates exploiting differences in resolution tools between parent and subsidiary banks, in particular in developing countries where rule enforcement is weaker. These results suggest that centralized regulation has heterogeneous effects depending on the country's development degree. Only the bail-in tool reduces systemic risk across the board, which has important implications for policymakers.