Martin Brown, Ioanna S Evangelou and Helmut Stix, (2018), “Banking crisis, bail-ins and money holdings”, VoxEU, 1 February
A cornerstone of new bank resolution policies across the world is the introduction of bail-ins to redistribute the costs of bank failures from taxpayers to bank creditors. This column uses the bail-in of two banks in Cyprus to examine how bank depositors react to this way of resolving a crisis. In the short run, customers who experienced deposit or bond bail-ins increased their holdings of cash and reduced deposits, while those who faced only an equity bail-in did not change their behaviour. In the medium run, confidence in the banking system among all depositors remained low.
Relevant Posts
- Philippon, Thomas, Salord, Aude, (2017), «New ICMB/CEPR Report: Bail-ins and Bank Resolution in Europe», VoxEU, 22 March
- Ewing, J. (2015) «As Cyprus Recovers From Banking Crisis, Deep Scars Remain«, The New York Times: International Business, 16 March