Research Discussion Papers, Bank of Finland
No 5/2003:
Economic evaluation of bank exit regimes in US, EU and Japanese financial centres
Peik Granlund ()
Abstract: This paper evaluates bank exit regimes in selected
financial centres using econometric methods. The focus is on bank exit
regimes applicable to commercial banks in New York, London, Frankfurt,
Helsinki and Tokyo in 1998–2002. Bank exit regimes are studied from the
perspective of bank creditors and bank shareholders. In order to apply
econometric methods, the exit regimes are indexed and then evaluated by
comparing them with market indicators that reflect the interests of bank
creditors and shareholders. These market indicators comprise bank
refinancing costs and bank growth rates. In other words, two specific
questions are addressed: (1) Do differences in bank exit regimes of
significance to bank creditors explain differences in bank refinancing
costs? (2) Do differences in bank exit regimes significant to bank
shareholders explain differences in bank growth? The study shows that in
those financial centres where the probability of bailout is higher,
refinancing costs for banks are lower.
Keywords: evaluation; bank; regulation; supervision; reorganisation; liquidation; (follow links to similar papers)
JEL-Codes: G15; G18; G21; (follow links to similar papers)
63 pages, February 28, 2003
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