The Impact of Various Bailout Programs on Bank Behaviour
The Impact of Various Bailout Programs on Bank Behaviour

Summary/Abstract: In this paper we assess of the most important and controversial policies used by governments: state loans, asset acquisition programs and nationalizations. We combine unique bank-level data of European banking institutions and cross-country data in order to estimate the impact of these programs on the banking sector stability. The existing literature includes many studies of the impact of individual policy measures on bank behavior, but as far as we know there is less research on the impact of various policies on banking sector risk. Our empirical results are correlated with an existing theoretical model from the literature (Dietrich, D., Hauck, A,. (2012),) and reflect a significant negative influence of state loan policy and nationalization on bank stability, while the acquisition of impaired assets from banks’ balance sheet reflects a positive and significant influence on bank stability

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