The Vienna Initiative as a Signaling Mechanism to Disrupt the Banking Doom Loop

Christian Glocker and Thomas Url
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Thomas Url: WIFO

No 718, WIFO Working Papers from WIFO

Abstract: We investigate the emergence of the Vienna Initiative (VI) as a public-private partnership established in response to the global financial crisis, and assess its short-term impact on the risk metrics of Western European banks. Our findings suggest that negative herding behavior toward certain banks can be associated with their decision to participate in the initiative. Banks with weaker balance sheet fundamentals showed a higher likelihood of participation. The measures implemented through the VI proved effective in curbing risk transmission within the network of participating banks, underscoring a strong signaling effect on investor sentiment. Our findings underscore the value of coordinated information disclosure and conditional support in curbing short-run risk transmission.

Keywords: Banking; Financial crisis; Herding behavior; Vienna Initiative; Network analysis; Event study (search for similar items in EconPapers)
Pages: 64 pages
Date: 2025-12-19
New Economics Papers: this item is included in nep-fdg
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Persistent link: https://EconPapers.repec.org/RePEc:wfo:wpaper:y:2025:i:718

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