Ireland’s 2010 EU/IMF intervention: Costs and benefits

Sjoerd van Bekkum

Journal of Banking & Finance, 2016, vol. 72, issue C, 175-183

Abstract: This paper examines the costs and benefits of the EU/IMF rescue package for Ireland, on November 29, 2010. We analyze the costs of the intervention and the subsequent increase in value of debt and/or equity issued by Irish banks, the Irish government, and European banks with substantial holdings of Irish debt. The total initial value increase around the announcement amounts to €5.59bln at a realized taxpayers’ cost of €4.23bln. While the value increase depends on somewhat generous assumptions, it further increases by €2.8bln up to Ireland’s exit in December 2013. About €3.1bln of the value created indirectly supports the European banking sector, indicating that substantial benefits arise from systemic risk containment.

Keywords: Bailout; Financial stability; European debt crisis; Event study (search for similar items in EconPapers)
JEL-codes: E58 G21 G28 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:72:y:2016:i:c:p:175-183

DOI: 10.1016/j.jbankfin.2014.12.025

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