Publication:
Are Banks Too Big to Fail or Too Big to Save? International Evidence from Equity Prices and CDS Spreads

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dc.contributor.authorHuizinga, Harry
dc.contributor.authorDemirgüç-Kunt, Asli
dc.date.accessioned2012-03-19T18:40:48Z
dc.date.available2012-03-19T18:40:48Z
dc.date.issued2010-07-01
dc.description.abstractDeteriorating public finances around the world raise doubts about countries' abilities to bail out their largest banks. For an international sample of banks, this paper investigates the impact of government indebtedness and deficits on bank stock prices and credit default swap spreads. Overall, bank stock prices reflect a negative capitalization of government debt and they respond negatively to deficits. The authors present evidence that in 2008 systemically large banks saw a reduction in their market valuation in countries running large fiscal deficits. Furthermore, the change in bank credit default swap spreads in 2008 relative to 2007 reflects countries' deterioration of public deficits. The results of the analysis suggest that some systemically important banks can increase their value by downsizing or splitting up, as they have become too big to save, potentially reversing the trend to ever larger banks. The paper also documents that a smaller proportion of banks are systemically important -- relative to gross domestic product -- in 2008 than in the two previous years, which could reflect private incentives to downsize.en
dc.identifierhttp://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100719151708
dc.identifier.doi10.1596/1813-9450-5360
dc.identifier.urihttps://hdl.handle.net/10986/3844
dc.languageEnglish
dc.relation.ispartofseriesPolicy Research Working Paper ; No. 5360
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectACCOUNTING
dc.subjectADVISORY SERVICES
dc.subjectASSETS RATIO
dc.subjectAVERAGE COSTS
dc.subjectBAD CREDIT
dc.subjectBAILOUT
dc.subjectBALANCE SHEETS
dc.subjectBANK ASSET
dc.subjectBANK ASSETS
dc.subjectBANK BONDS
dc.subjectBANK COMPETITION
dc.subjectBANK CREDIT
dc.subjectBANK CREDITORS
dc.subjectBANK DEPOSITS
dc.subjectBANK FAILURE
dc.subjectBANK FAILURES
dc.subjectBANK FOR INTERNATIONAL SETTLEMENTS
dc.subjectBANK LIABILITIES
dc.subjectBANK LIABILITY
dc.subjectBANK MARKET
dc.subjectBANK MERGERS
dc.subjectBANK PROFITABILITY
dc.subjectBANK REGULATION
dc.subjectBANK RISK
dc.subjectBANK SIZE
dc.subjectBANK VALUATION
dc.subjectBANKING CORPORATION
dc.subjectBANKING CRISES
dc.subjectBANKING CRISIS
dc.subjectBANKING INDUSTRY
dc.subjectBANKING SECTOR
dc.subjectBANKING SYSTEM
dc.subjectBANKING SYSTEMS
dc.subjectBANKRUPTCY
dc.subjectBANKRUPTCY PROCEEDINGS
dc.subjectBANKS
dc.subjectBENCHMARK
dc.subjectBENCHMARKS
dc.subjectBOND
dc.subjectBOND HOLDERS
dc.subjectBOND MARKET
dc.subjectBOND MARKETS
dc.subjectBOND YIELD
dc.subjectBONDS
dc.subjectBOOK VALUE
dc.subjectBORROWING
dc.subjectBORROWING CAPACITY
dc.subjectBUDGET BALANCE
dc.subjectBUDGET BALANCES
dc.subjectBUDGET CONSTRAINTS
dc.subjectBUSINESS CYCLE
dc.subjectCAPITAL ASSETS
dc.subjectCAPITAL REGULATION
dc.subjectCAPITAL REQUIREMENTS
dc.subjectCAPITALIZATION
dc.subjectCDS
dc.subjectCENTRAL BANKS
dc.subjectCENTRAL GOVERNMENT DEBT
dc.subjectCHECKS
dc.subjectCLAIM
dc.subjectCOMPETITIVE ADVANTAGES
dc.subjectCONTINGENT CLAIM
dc.subjectCONTINGENT LIABILITIES
dc.subjectCORPORATE YIELD
dc.subjectCREDIT DEFAULT
dc.subjectCREDIT DEFAULT SWAP
dc.subjectCREDIT DEFAULT SWAPS
dc.subjectCREDIT DERIVATIVES
dc.subjectCREDIT INSTITUTIONS
dc.subjectCREDIT LOSSES
dc.subjectCREDIT QUALITY
dc.subjectCREDIT RATING
dc.subjectCURRENCY
dc.subjectDEBENTURE
dc.subjectDEBENTURE HOLDERS
dc.subjectDEBENTURES
dc.subjectDEBT
dc.subjectDEBT ISSUES
dc.subjectDEBT RATIO
dc.subjectDEFAULT RISK
dc.subjectDEFICITS
dc.subjectDEPENDENT
dc.subjectDEPOSIT
dc.subjectDEPOSIT INSTITUTION
dc.subjectDEPOSIT INSURANCE
dc.subjectDEPOSIT INSURANCE SCHEME
dc.subjectDEPOSIT LIABILITIES
dc.subjectDISTRESSED BANKS
dc.subjectDIVIDEND
dc.subjectDOMESTIC BANK
dc.subjectDUMMY VARIABLE
dc.subjectDUMMY VARIABLES
dc.subjectEARNING ASSETS
dc.subjectEARNINGS
dc.subjectECONOMIC CRISIS
dc.subjectECONOMIC RENTS
dc.subjectECONOMIES OF SCALE
dc.subjectEMERGING MARKET
dc.subjectEMERGING MARKET ECONOMIES
dc.subjectEUROPEAN CENTRAL BANK
dc.subjectEXPECTED RETURNS
dc.subjectEXPLICIT DEPOSIT INSURANCE
dc.subjectEXTERNALITIES
dc.subjectFINANCIAL CRISIS
dc.subjectFINANCIAL INSTITUTIONS
dc.subjectFINANCIAL SAFETY
dc.subjectFINANCIAL SAFETY NETS
dc.subjectFINANCIAL SECTOR
dc.subjectFINANCIAL STUDIES
dc.subjectFINANCIAL SUPPORT
dc.subjectFISCAL AUTHORITIES
dc.subjectFISCAL BALANCE
dc.subjectFISCAL BALANCES
dc.subjectFISCAL DEFICITS
dc.subjectFOREIGN BANK
dc.subjectFUTURE FINANCIAL CRISIS
dc.subjectGDP
dc.subjectGDP PER CAPITA
dc.subjectGOVERNMENT DEBT
dc.subjectGOVERNMENT DEFICITS
dc.subjectGOVERNMENT FINANCE
dc.subjectGOVERNMENT FINANCES
dc.subjectGOVERNMENT INDEBTEDNESS
dc.subjectGOVERNMENT REVENUES
dc.subjectGROSS DOMESTIC PRODUCT
dc.subjectHIGH DEBT
dc.subjectHOLDINGS
dc.subjectIMPLICIT SUBSIDIES
dc.subjectIMPLICIT SUBSIDY
dc.subjectINDEBTED
dc.subjectINDEBTED COUNTRIES
dc.subjectINDIVIDUAL BANK
dc.subjectINDIVIDUAL BANKS
dc.subjectINFORMATION ON CREDIT
dc.subjectINSIDER TRADING
dc.subjectINSOLVENCY
dc.subjectINSURED DEPOSITS
dc.subjectINTERNATIONAL BANK
dc.subjectINTERNATIONAL BANKING
dc.subjectINTERNATIONAL BANKS
dc.subjectINVESTMENT BANKS
dc.subjectLARGE BANK
dc.subjectLARGE BANKS
dc.subjectLEADING INDICATORS
dc.subjectLEVERAGE
dc.subjectLIABILITY
dc.subjectLIQUIDITY
dc.subjectLOSSES ON BANK
dc.subjectLOSSES ON BANKS
dc.subjectMARKET DISCIPLINE
dc.subjectMARKET PRICES
dc.subjectMARKET VALUE
dc.subjectMATURITY
dc.subjectMERGER
dc.subjectMONETARY POLICY
dc.subjectMORAL HAZARD
dc.subjectMORTGAGE
dc.subjectMORTGAGE LOANS
dc.subjectNATIONAL ECONOMIES
dc.subjectNATIONAL ECONOMY
dc.subjectNEGATIVE EXTERNALITIES
dc.subjectNUMBER OF BANKS
dc.subjectPOSITIVE COEFFICIENT
dc.subjectPOSITIVE COEFFICIENTS
dc.subjectPRICE DISCOVERY
dc.subjectPROFITABILITY
dc.subjectPUBLIC ASSISTANCE
dc.subjectPUBLIC BUDGET
dc.subjectPUBLIC DEBT
dc.subjectPUBLIC DEBTS
dc.subjectPUBLIC FINANCE
dc.subjectPUBLIC FINANCES
dc.subjectPUT OPTION
dc.subjectREGULATORY FORBEARANCE
dc.subjectREGULATORY RESTRICTIONS
dc.subjectREORGANIZATION
dc.subjectRETURN
dc.subjectRETURN ON ASSETS
dc.subjectRETURNS
dc.subjectRISK DIVERSIFICATION
dc.subjectRISK EXPOSURE
dc.subjectRISK PROFILE
dc.subjectSAFETY NET
dc.subjectSECURITIES
dc.subjectSHAREHOLDER
dc.subjectSHAREHOLDER VALUE
dc.subjectSHAREHOLDERS
dc.subjectSMALL BANK
dc.subjectSMALL BANKS
dc.subjectSOLVENCY
dc.subjectSTOCK MARKET
dc.subjectSTOCK MARKET VOLATILITY
dc.subjectSTOCK MARKETS
dc.subjectSTOCK PRICES
dc.subjectSTOCK RETURN
dc.subjectSTOCK RETURNS
dc.subjectSUBORDINATED DEBT
dc.subjectSUBSIDIARIES
dc.subjectSUBSIDIARY
dc.subjectSWAP MARKET
dc.subjectSYSTEMIC BANKING CRISES
dc.subjectTAKEOVER
dc.subjectTAX
dc.subjectTAXATION
dc.subjectTRADING
dc.subjectUNION
dc.subjectVALUATION
dc.subjectWEALTH
dc.subjectWEALTH EFFECT
dc.subjectWEALTH EFFECTS
dc.subjectWINDING-UP
dc.subjectYIELD SPREADS
dc.titleAre Banks Too Big to Fail or Too Big to Save? International Evidence from Equity Prices and CDS Spreadsen
dspace.entity.typePublication
okr.crossref.titleAre Banks Too Big To Fail Or Too Big To Save ? International Evidence From Equity Prices And CDS Spreads
okr.date.disclosure2010-07-19
okr.date.doiregistration2025-04-10T11:46:12.136961Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.docurlhttp://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100719151708
okr.guid516581468333021676
okr.identifier.doi10.1596/1813-9450-5360
okr.identifier.externaldocumentum000158349_20100719151708
okr.identifier.internaldocumentum12560748
okr.identifier.reportWPS5360
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2010/07/19/000158349_20100719151708/Rendered/PDF/WPS5360.pdfen
okr.sectorFinance :: General finance sector
okr.unitDevelopment Research Group (DECRG)
okr.unitDECRG: Finance & Priv Sec Devt (DECFP)
okr.volume1 of 1
relation.isAuthorOfPublication234a20c0-893c-561a-8c90-6f5be5be5b9b
relation.isAuthorOfPublication.latestForDiscovery234a20c0-893c-561a-8c90-6f5be5be5b9b
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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