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Banking Crisis Resolution Policy - Lessons from Recent Experience - which elements are needed for robust and efficient crisis resolution?

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  • David G. Mayes

Abstract

The current financial crisis has sparked intense debate about how weak banks should be resolved. Despite international efforts to coordinate and converge on such policies, national policy advice and resolution practices differ. The resolution methods adopted in the Nordic banking crises in the 1990s are generally acknowledged to include important elements of “best practice”. But some of these lessons have proved hard to implement during the current crisis, and new policies have been developed as a response, particularly in the UK. Still, unresolved issues remain. These are discussed in a review of the resolution methods in the US, UK and NZ.

Suggested Citation

  • David G. Mayes, 2009. "Banking Crisis Resolution Policy - Lessons from Recent Experience - which elements are needed for robust and efficient crisis resolution?," CESifo Working Paper Series 2823, CESifo.
    • Handle: RePEc:ces:ceswps:_2823
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    References listed on IDEAS

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    1. Wall, Larry D., 2009. "Prudential Discipline for Financial Firms: Micro, Macro, and Market Structures," ADBI Working Papers 176, Asian Development Bank Institute.
    2. Mayes, David G. & Nieto, María J. & Wall, Larry, 2008. "Multiple safety net regulators and agency problems in the EU: Is Prompt Corrective Action partly the solution?," Journal of Financial Stability, Elsevier, vol. 4(3), pages 232-257, September.
    3. Finn Østrup & Lars Oxelheim & Clas Wihlborg, 2009. "Origins and Resolution of Financial Crises: Lessons from the Current and Northern European Crises," Asian Economic Papers, MIT Press, vol. 8(3), pages 178-220, Fall.
    4. Joe Peek & Eric S. Rosengren, 1997. "Will Legislated Early Intervention Prevent the Next Banking Crisis?," Southern Economic Journal, John Wiley & Sons, vol. 64(1), pages 268-280, July.
    5. David G. Mayes & Geoffrey Wood, 2009. "Lessons from the Northern Rock Episode," Palgrave Macmillan Books, in: Robert R. Bliss & George G. Kaufman (ed.), Financial Institutions and Markets, chapter 4, pages 75-99, Palgrave Macmillan.
    6. Gillian G.H. Garcia, 2009. "Ignoring the lessons for effective prudential supervision, failed bank resolution and depositor protection," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 17(3), pages 186-209, July.
    7. McIntyre, M.L. & Tripe, David & Zhuang, Xiaojie (Jeff), 2009. "Testing for effective market supervision of New Zealand banks," Journal of Financial Stability, Elsevier, vol. 5(1), pages 25-34, January.
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    Cited by:

    1. Eijffinger, Sylvester & Nijskens, Rob, 2011. "Complementing Bagehot: Illiquidity and insolvency resolution," CEPR Discussion Papers 8603, C.E.P.R. Discussion Papers.
    2. David G. Mayes, 2012. "Moral Hazard, Bank Resolution and the Protection of Depositors," Chapters, in: James R. Barth & Chen Lin & Clas Wihlborg (ed.), Research Handbook on International Banking and Governance, chapter 14, Edward Elgar Publishing.

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    More about this item

    Keywords

    crisis resolution; banks; special resolution regime;
    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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