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Financial earthquakes and aftershocks: From Brexit to Russia-Ukraine conflict and the stability of European banks

Author

Listed:
  • Vu, Phuong Thi Thu
  • Huynh, Nhan
  • Phan, Hoa
  • Hoang, Hanh

Abstract

This study examines the impacts of recent turbulent events (Brexit, COVID-19 pandemic, and the Russia – Ukraine conflict) on the European banks’ resilience. Using the quarterly data of 251 commercial banks in 33 European economies from 2014 to 2022, we find that uncertainties significantly reduce bank’s overall performance and stability. The comparisons of each event reveal the differential impacts in nature on specific indicators of performance and stability. The additional analyses highlight the roles of bank size, age, holding capital, and business models in attenuating the destabilizing effects of those shocks. The disparity effects are also visible across affiliations to income-generation levels and the European Union. The results are robust across alternative performance proxies and econometric approaches. From the starting point of this study, valuable implications are proposed for stakeholders, regulators, and policymakers in the challenges of unprecedented uncertainties.

Suggested Citation

  • Vu, Phuong Thi Thu & Huynh, Nhan & Phan, Hoa & Hoang, Hanh, 2023. "Financial earthquakes and aftershocks: From Brexit to Russia-Ukraine conflict and the stability of European banks," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:intfin:v:88:y:2023:i:c:s1042443123000987
    DOI: 10.1016/j.intfin.2023.101830
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    Keywords

    Geopolitical risk; Health crisis; Economic policy uncertainty; Bank stability; European banks;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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