FDICIA and bank failure contagion: Evidence from the two failures of first city bancorporation

1999 ◽  
Vol 23 (1) ◽  
pp. 99-111 ◽  
Author(s):  
Robert A. Weigand ◽  
Donald R. Fraser ◽  
Babu G. Baradwaj
Keyword(s):  
Bank Failure

“The Crooked Smile of TCR”: Banks’ Solvency and Restructuring Costs in the European Banking Industry

SAGE Open ◽  
2021 ◽  
Vol 11 (3) ◽  
pp. 215824402110459
Author(s):  
Małgorzata Iwanicz-Drozdowska ◽  
Krzysztof Jackowicz ◽  
Maciej Karczmarczyk
Keyword(s):  
Probability Function ◽  
Bank Failure ◽  
Capital Adequacy ◽  
Special Importance ◽  
Stress Tests ◽  
Distribution Probability ◽  
Total Capital ◽  
European Banking ◽  
European Banks ◽  
Bank Restructuring

In this study, we analyze the probability of bank failure, the expected losses, and the costs of bank restructuring with the application of a lognormal distribution probability function for three categories of European banks, that is, small, medium, and large, over the post-crisis period from 2012 to 2016. Our goal was to determine whether the total capital ratio (TCR) properly reflects banks’ solvency under stress conditions. We identified a phenomenon that one can call the “crooked smile of TCR”. Medium-sized banks with relatively high TCRs performed poorly in stress tests; however, the probability of bank failure increases slightly with the size of the bank, while the TCR decreases. We claim that the focus on capital adequacy measures is not sufficient to achieve the goal of improving banks’ stability and reducing their restructuring costs. Our results are of special importance for medium-sized banks, as these banks are not regularly subjected to publicly available stress tests.

Bank Failure Management – The Role of Deposit Insurance

2019 ◽  
Author(s):  
Patrizia Baudino ◽  
Ryan Defina ◽  
José María Fernández Real ◽  
Kumudini Hajra ◽  
Ruth Walters
Keyword(s):  
Deposit Insurance ◽  
Bank Failure
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