TY - JOUR
T1 - 'Too Systemically Important To Fail’ in Banking – Evidence from Bank Mergers and Acquisitions
AU - Molyneux, P.
AU - Schaeck, K.
AU - Zhou, T.M.
PY - 2014/4/2
Y1 - 2014/4/2
N2 - In this paper, we examine the systemic risk implications of
banking institutions that are considered ‘Too-systemically-important-
to-fail’ (TSITF). We exploit a sample of bank mergers and
acquisitions (MandAs) in nine EU economies between 1997 and 2007
to capture safety net subsidy effects and evaluate their ramifications
for systemic risk. We find that safety net benefits derived
from MandA activity have a significantly positive association with
rescue probability, suggesting moral hazard in banking systems.
We, however, find no evidence that gaining safety net subsidies
leads to TSITF bank’s increased interdependency over peer banks
AB - In this paper, we examine the systemic risk implications of
banking institutions that are considered ‘Too-systemically-important-
to-fail’ (TSITF). We exploit a sample of bank mergers and
acquisitions (MandAs) in nine EU economies between 1997 and 2007
to capture safety net subsidy effects and evaluate their ramifications
for systemic risk. We find that safety net benefits derived
from MandA activity have a significantly positive association with
rescue probability, suggesting moral hazard in banking systems.
We, however, find no evidence that gaining safety net subsidies
leads to TSITF bank’s increased interdependency over peer banks
U2 - 10.1016/j.jimonfin.2014.03.006
DO - 10.1016/j.jimonfin.2014.03.006
M3 - Article
SN - 0261-5606
VL - 49
SP - 258
EP - 282
JO - Journal of International Money and Finance
JF - Journal of International Money and Finance
IS - part B
ER -