Risk Allocation and Bond Mis-selling After the Bail-in Directive

Angela Maddaloni and Giulia Scardozzi ()
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Giulia Scardozzi: Roma Tre University

Chapter Chapter 3 in The New Bail-In Legislation, 2022, pp 33-48 from Palgrave Macmillan

Abstract: Abstract This chapter analyzes the holding of bail-inable securities. During 2012–2013, several cases of mis-selling occurred in European countries as banks sold risky bonds to retail investors as “safe assets.” The chapter shows how bond holdings across different types of investors has evolved in recent times. Before the approval of the new resolution regime, the mis-selling was a widespread financial phenomenon, especially in Southern Euro Area countries. However, allocation of bonds across sectors changed after the launch of the bail-in resolution mechanism; households sold their bank bonds to other, more sophisticated, financial intermediaries. This suggests that the new European Resolution mechanism was effective in reducing the mis-selling of bank bonds.

Keywords: Bond holdings; Bond; Bail-in; Portfolio allocation; Mis-selling (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-3-030-87560-2_3

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DOI: 10.1007/978-3-030-87560-2_3

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