Too big to fail: Some empirical evidence on the causes and consequences of public banking interventions in the UK

B-Tier
Journal: Journal of International Money and Finance
Year: 2012
Volume: 31
Issue: 8
Pages: 2038-2051

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

During the 2007–09 financial crisis, the banking sector received an extraordinary level of public support. In this empirical paper, we examine the determinants of a number of public sector interventions: government funding or central bank liquidity insurance schemes, public capital injections, and nationalizations. We use bank-level data spanning all British and foreign banks operating within the United Kingdom. We use multinomial logit regression techniques and find that a bank's size, relative to the size of the entire banking system, typically has a large positive and non-linear effect on the probability of public sector intervention for a bank. We also use instrumental variable techniques to show that British interventions helped; there is fragile evidence that the wholesale (non-core) funding of an affected institution increased significantly following capital injection or nationalization.

Technical Details

RePEc Handle
repec:eee:jimfin:v:31:y:2012:i:8:p:2038-2051
Journal Field
International
Author Count
2
Added to Database
2026-01-29