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Developing Distress Resolution Procedures for Financial Institutions

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  • Clas Wihlborg

Abstract

This paper focuses on the need for a lex specialis for resolution of insolvent banks and other financial institutions serving similar functions, and on requirements for making resolution procedures effective. After a review of the objectives of general insolvency law and the special characteristics of banks and the financial system, approaches to resolution procedures in a few “model countries” are described. The issues that require attention in legislation for resolution procedures are identified as the contagion issue, the valuation issue, the predictability issue, the information issue, the coverage issue, the funding issue and the cross-border issue. Complementary reforms of the financial architecture that would enhance the effectiveness of legislation for resolution procedures are discussed as well
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Clas Wihlborg, 2012. "Developing Distress Resolution Procedures for Financial Institutions," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
  • Handle: RePEc:erf:erfssc:71-1
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    File URL: http://www.suerf.org/docx/s_e6ba70fc093b4ce912d769ede1ceeba8_3547_suerf.pdf
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    References listed on IDEAS

    as
    1. Robert A. Eisenbeis & Larry D. Wall, 2002. "Reforming deposit insurance and FDICIA," Economic Review, Federal Reserve Bank of Atlanta, pages 1-16.
    2. Clas Wihlborg & Shubhashis Gangopadhyay, 2001. "Infrastructure Requirements in the Area of Bankruptcy Law," Center for Financial Institutions Working Papers 01-09, Wharton School Center for Financial Institutions, University of Pennsylvania.
    3. Clas Wihlborg & Larry Wall & Maria. J Nieto & Thomas F. Huertas & Gillian G.H. Garcia & George G.Kaufman & David G. Mayes & Robert A.Eisenbeis & Rosa M. Lastra, 2007. "Prompt Corrective Action & Cross-Border Supervisory Issues in Europe," FMG Special Papers sp171, Financial Markets Group.
    4. IV, Thomas J. Fitzpatrick & Kearney-Marks, Moira & Thomson, James B., 2012. "The history and rationale for a separate bank resolution process," Economic Commentary, Federal Reserve Bank of Cleveland, issue Feb.
    5. Fitzpatrick, Thomas J. & Thomson, James B., 2011. "An end to too big to let fail? The Dodd-Frank Act's orderly liquidation authority," Economic Commentary, Federal Reserve Bank of Cleveland, issue Jan.
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    Citations

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    Cited by:

    1. Elisa Luciano & Clas Wihlborg, 2013. "The Organization of Bank Affiliates; A Theoretical Perspective on Risk and Efficiency," ICER Working Papers 06-2013, ICER - International Centre for Economic Research.
    2. Mullineux, Andy, 2014. "Banking for the public good," International Review of Financial Analysis, Elsevier, vol. 36(C), pages 87-94.

    More about this item

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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