The effect of bank bail-outs in the EU

Emilio Barucci, Tommaso Colozza and Carlo Milani

Journal of International Money and Finance, 2019, vol. 95, issue C, 14-26

Abstract: The financial crisis renewed the debate on the bail-out of financial institutions, questioning the effectiveness of such an intervention in restoring normal economic conditions. This paper analyzes the effect on the real economy of State financial support to distressed banks, using a panel approach that covers all countries in the EU throughout the financial crisis. Results show that State financial support was able to enhance economic conditions by restoring trust in financial markets. State support boosted the ongoing substitution between securities and bank lending as the main financing channel of non-financial firms.

Keywords: State financial support; Bail-out; Economic growth; Financial stability (search for similar items in EconPapers)
JEL-codes: E65 G01 G21 G28 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:95:y:2019:i:c:p:14-26

DOI: 10.1016/j.jimonfin.2019.03.004

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