Is there a "retail challenge" to banks' resolvability? What do we know about the holders of bail-inable securities in the Banking Union?

Tatiana Farina, Jan Pieter Krahnen, Irene Mecatti, Loriana Pelizzon (), Jonas Schlegel and Tobias Tröger

No 92, SAFE White Paper Series from Leibniz Institute for Financial Research SAFE

Abstract: To ensure the credibility of market discipline induced by bail-in, neither retail investors nor peer banks should appear prominently among the investor base of banks' loss absorbing capital. Empirical evidence on bank-level data provided by the German Federal Financial Supervisory Authority raises a few red flags. Our list of policy recommendations encompasses disclosure policy, data sharing among supervisors, information transparency on holdings of bail-inable debt for all stakeholders, threshold values, and a well-defined upper limit for any bail-in activity. This document was provided by the Economic Governance Support Unit at the request of the ECON Committee.

Keywords: Banking Union; Bailin; Retail Challenge (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-ban
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewh:92

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