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Reassessing Financial Crisis Management: The Impact of Bailouts and Bail-Ins on Moral Hazard and Sustainable Recovery Strategies

Author

Listed:
  • Amira Kaddour

    (Department of Financial Management, College of Business, King Khalid University KSA, Abha 62521, Saudi Arabia)

  • Rahma Boubaker

    (Department of Financial Management, College of Business, King Khalid University KSA, Abha 62521, Saudi Arabia)

  • Salim Moualdi

    (Department of Financial Management, College of Business, King Khalid University KSA, Abha 62521, Saudi Arabia)

  • Huda Alsayed

    (Department of Accounting, College of Business, King Khalid University KSA, Abha 62521, Saudi Arabia)

Abstract

This paper studies the impact of crisis management mechanisms (bailouts and bail-ins) on moral hazard. Through an econometric study of financial crises in emerging countries since 1993, the results indicate that recurrent bailouts exacerbate moral hazard, while bail-ins have only a minor impact due to their perceived lack of credibility. The results highlight the impact of crisis management measures on financial stability and the scale of the mobilised resources. Analysed in the context of efforts to support sustainable development, the study recommends reassessing the fundamentals of the bailout approach, developing a robust and sustainable bailout framework that aligns immediate interventions with sustainability objectives towards sustainable recovery strategies.

Suggested Citation

  • Amira Kaddour & Rahma Boubaker & Salim Moualdi & Huda Alsayed, 2025. "Reassessing Financial Crisis Management: The Impact of Bailouts and Bail-Ins on Moral Hazard and Sustainable Recovery Strategies," JRFM, MDPI, vol. 18(2), pages 1-12, February.
    • Handle: RePEc:gam:jjrfmx:v:18:y:2025:i:2:p:101-:d:1591973
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    References listed on IDEAS

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    1. Corsetti, Giancarlo & Pesenti, Paolo & Roubini, Nouriel, 1999. "What caused the Asian currency and financial crisis?," Japan and the World Economy, Elsevier, vol. 11(3), pages 305-373, October.
    2. Leanza, Luca & Sbuelz, Alessandro & Tarelli, Andrea, 2021. "Bail-in vs bail-out: Bank resolution and liability structure," International Review of Financial Analysis, Elsevier, vol. 73(C).
    3. Noy, Ilan, 2008. "Sovereign default risk, the IMF and creditor moral hazard," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 18(1), pages 64-78, February.
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    Cited by:

    1. Sivá, Soňa, 2025. "The effects of government bailouts on bank performance in the EU," Finance Research Letters, Elsevier, vol. 79(C).

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