Reassessing Financial Crisis Management: The Impact of Bailouts and Bail-Ins on Moral Hazard and Sustainable Recovery Strategies

Amira Kaddour (), Rahma Boubaker, Salim Moualdi and Huda Alsayed
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Amira Kaddour: Department of Financial Management, College of Business, King Khalid University KSA, Abha 62521, Saudi Arabia
Rahma Boubaker: Department of Financial Management, College of Business, King Khalid University KSA, Abha 62521, Saudi Arabia
Salim Moualdi: Department of Financial Management, College of Business, King Khalid University KSA, Abha 62521, Saudi Arabia
Huda Alsayed: Department of Accounting, College of Business, King Khalid University KSA, Abha 62521, Saudi Arabia

JRFM, 2025, vol. 18, issue 2, 1-12

Abstract: This paper studies the impact of crisis management mechanisms (bailouts and bail-ins) on moral hazard. Through an econometric study of financial crises in emerging countries since 1993, the results indicate that recurrent bailouts exacerbate moral hazard, while bail-ins have only a minor impact due to their perceived lack of credibility. The results highlight the impact of crisis management measures on financial stability and the scale of the mobilised resources. Analysed in the context of efforts to support sustainable development, the study recommends reassessing the fundamentals of the bailout approach, developing a robust and sustainable bailout framework that aligns immediate interventions with sustainability objectives towards sustainable recovery strategies.

Keywords: financial crises; bailout; bail-in; moral hazard; sustainability (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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