Bank fragility and financial stability policies

Stanga, I. M., 2019, [Groningen]: University of Groningen, SOM research school. 170 p.

Research output: ThesisThesis fully internal (DIV)Academic

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  • Irina Mihaela Stanga
This book investigates various causes of bank fragility and the effectiveness of key macro-prudential tools and bailout policies in preserving or restoring stability in the banking system.
The results indicate that a high reliance on wholesale funding is associated with lower bank stability and the negative effects are amplified in a competitive environment. The liquidity risk of banks increases as they become susceptible to bank runs by wholesale financiers. Therefore, a loan portfolio financed with high leverage implies higher overall risk even if it consists of safe assets. From a policy perspective, the analysis suggests that macro-prudential policies, and in particular lower regulatory loan-to-value ratios, are associated with a reduction in mortgage defaults. Finally, the results show that bailout policies were effective in reducing the default risk of banks, however they generated a risk transfer from banks to governments and amplified the bank-sovereign contagion channels in Europe.
Original languageEnglish
QualificationDoctor of Philosophy
Awarding Institution
  • Lensink, Robert, Supervisor
  • Jacobs, Jan, Co-supervisor
  • Lamers, M. A., Co-supervisor
  • Dungey, M., Assessment committee, External person
  • van Lelyveld, I., Assessment committee, External person
  • Spierdijk, Laura, Assessment committee
Award date7-Feb-2019
Place of Publication[Groningen]
Print ISBNs978-94-034-1136-1
Electronic ISBNs978-94-034-1135-4
Publication statusPublished - 2019

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