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Financial crises & bank failures in Europe: from bail-outs to bail-ins

Published on March 31, 2016   27 min
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PROF. AZZIM GULAMHUSSEN: Hello, my name is Azzim Gulamhussen, and I'm a professor of financial institutions at the Vlerick Business School, based in Brussels. In this talk, I am going to address the topic of financial crises and bank failures in Europe.
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I will cover the following issues. What are the reasons for the recent interest in the topic? The pervasiveness of crises and their interrelatedness. Evidence from the recent crisis in Europe. The road from bail-outs to bail-ins. The rationale for resolution and the process. The practicalities of bail-in. The differences between bail-in and other financial instruments. And some perspectives on going forward with bail-ins.
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A first and obvious question relates to the reasons for the recent surge in interest in bank failures in Europe. The recent financial crisis and the need to bail out several banks had massive costs for taxpayers that led to outcries from the media and the public. These outcries were justified on the grounds that managers and shareholders of banks ripped off benefits from risk taking activities prior to the onset of the financial crisis, but the losses had to be ultimately borne by taxpayers rather than the share and debt holders of banks. From the academic perspective, the main interest resides in understanding the causes and consequences of the crisis. From the policy perspective, the main interest resides in immunizing the financial system from future financial crisis, guaranteeing the sound functioning of markets, and facilitating economic development.
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Financial crises & bank failures in Europe: from bail-outs to bail-ins

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