BANK BAILOUTS IN EUROPE AND BANK PERFORMANCE

Maria Gerhardt and Rudi Vander Vennet

Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration

Abstract: During the financial crisis, European governments implemented emergency rescue packages to support struggling banks. No less than 114 European banks benefited from goverment support in the period 2007 to 2013. We investigate the financial condition of banks before and after receiving state support by running logit regressions. Our results indicate that the equity ratio is the decisive indicator to predict distress. Bank-specific variables, such as loan provision, nonperforming loans and bank size also perform well in detecting bank bailouts. Surprisingly, the aided banks hardly improve their performance indicators after they have been rescued but maintain similar risk profiles/business models.

Keywords: Bank bailout; state aid; financial crisis; logit analysis (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2016-05
New Economics Papers: this item is included in nep-ban, nep-cba, nep-dcm and nep-eec
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Bank bailouts in Europe and bank performance (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:16/921

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