IDEAS home Printed from https://ideas.repec.org/p/rza/ersawp/755.html

Can creditor bail-in trigger contagion? The experience of an emerging market

Author

Listed:
  • Roy Havemann

Abstract

The successful bail-in of creditors in African Bank, a small South African monoline lender, provides an opportunity to evaluate the intended and unintended consequences of new resolution tools. Using a dataset that matches quarterly, daily, and financial-instrument level data, I show that the bail-in led to money-market funds “breaking the buck”, triggering significant redemptions and some financial contagion. To limit potential systemic effects, the authorities used complementary interventions, including imposing discretionary liquidity restrictions on mutual funds and market-making facilities for affected financial instruments. This supported a sustainable restructuring of the bank and reduced financial spillovers. The lesson is that future interventions using these new resolution tools should take into account the potential unintended systemic implications, particularly in smaller jurisdictions where there is a high degree of interconnectedness between bank and nonbank financial institutions.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Roy Havemann, 2018. "Can creditor bail-in trigger contagion? The experience of an emerging market," ERSA Working Paper Series 755, Economic Research Southern Africa.
    • Handle: RePEc:rza:ersawp:755
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. is not listed on IDEAS
    2. Serena Merrino & Ilias Chondrogiannis, 2024. "Did Basel III reduce bank spillovers in South Africa," Working Papers 11060, South African Reserve Bank.
    3. Siebenbrunner, Christoph & Hafner-Guth, Martin & Spitzer, Ralph & Trappl, Stefan, 2024. "Assessing the systemic risk impact of bank bail-ins," Journal of Financial Stability, Elsevier, vol. 71(C).
    4. Deng, Kaihua & Fu, Qilong & Huang, Dongxia, 2025. "Soft going-concern capital buffer? CoCo non-calls and revealed bank distress," Journal of Corporate Finance, Elsevier, vol. 93(C).
    5. Roy Havemann, "undated". "Contagion without deposit insurance: The South African small bank crisis of 2002/3," ERSA Working Paper Series v::y:2020:i::id:108, Economic Research Southern Africa.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rza:ersawp:755. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Maggi Sigg (email available below). General contact details of provider: https://ersawps.org/index.php/working-paper-series/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.