Preparing for the Next Financial Crisis

Crisis management and resolution 209

Taking into account post- GFC reforms, Schäfer etal. (2017) nd an impact

of the new resolution framework on funding costs. They provide evidence of

increased CDS spreads and falling stock prices most notably after the bail- in in

Cyprus. However, bail- in expectations appear to depend on the sovereign’s s-

cal strength, i.e. reactions are stronger for banks in countries with limited scal

space for bailout. Overall, the evidence suggests that bailout expectations have

been reduced but have not disappeared.

Beck etal. (2019) analyse the relationship between bank resolution frame-

works and systemic risk (measured by the CoVar), using a database of bank res-

olution regimes in 22 member countries. Analys ...