This thesis is concerned with the relation between bank regulation and the risk-taking behaviour of banks. Two major instruments of regulatory intervention are considered: bank levy and bank bailouts. The major objective of this thesis is to provide an answer to the following questions: Do bank levies increase the risk-taking of banks in a competitive environment? When do bank bailouts decrease banks` risk-taking? Does the international coordination of bank bailouts affect the relation between bailouts and the risk-taking behaviour of banks? Who should rescue subsidiaries of multinational banks? How could an efficient bailout policy be designed and implemented?
The bank levy and cooperation between national regulators play an important role in the recently adopted Bank Recovery and Resolution Directive (BRRD). This directive is a cornerstone of bank regulation in Europe. Although the conversion of debt into equity (bail-in) in emergencies is the key component of the current regulation, bailouts, or at least the assistance to struggling banks, should not be excluded. As the ordinary resolution tools, for instance, bail-in, have not yet been tested in a real crisis, and due to the fact that it will take time to prepare global institutions for such a tool, it may be useful to have an adequately designed tool of last resort available, such as an adequate bailout policy, in order to avoid the disruption of critical economic functions.
We show that a bank levy may decrease banks`risk-taking behaviour. Bank bailouts can also decrease the risk-taking of banks. This depends on the regulator`s ability to condition his bailout policy in accordance with the macroeconomic environment, which has an impact on the banks` probability of success, or on his ability to condition the bailout policy on the banks` systemic relevance. Coordination of bailouts through a multinational regulator can improve welfare. The desirability of internationally coordinated bailouts depends on the dimension of the crisis. If the crisis is severe, it may be more efficient to delegate bank bailouts to a multinational regulator. However, such a delegation is not always feasible. Therefore, a predefined burden sharing of bank bailouts is necessary in order to achieve an efficient resolution of banks in distress.
| Identifer | oai:union.ndltd.org:DRESDEN/oai:qucosa.de:bsz:15-qucosa-157041 |
| Date | 12 December 2014 |
| Creators | Diemer, Michael |
| Contributors | Universität Leipzig, Wirtschaftswissenschaftliche Fakultät, Prof. Dr. Uwe Vollmer, Prof. Dr. Harald Wiese |
| Publisher | Universitätsbibliothek Leipzig |
| Source Sets | Hochschulschriftenserver (HSSS) der SLUB Dresden |
| Language | English |
| Detected Language | English |
| Type | doc-type:doctoralThesis |
| Format | application/pdf |
Page generated in 0.0023 seconds