Bank resolution, regulatory arbitrage, and systemic risk
Abstract
We analyze the effect of bank resolution reforms on the systemic risk of financial conglomerates. We find that in developed countries, parent banks in a stricter resolution regime to their foreign subsidiaries have lower systemic risk contributions. The opposite is true for parents from developing countries. We explain these results as conglomerates exploiting differences in resolution between parents and subsidiaries, especially in developing countries, where rule enforcement is weaker. These results suggest that a more comprehensive regime has heterogeneous effects depending on country development, which has important implications for policymakers.
Fields of Study & Subjects
Banking stability
regulation
efficiency
Credit Risk and Financial Regulations
Global Financial Crisis and Policies
Publication details
- Journal / source
- Journal of International Money and Finance
- Publisher
- Elsevier BV
- Volume
- 167
- Pages
- 103591–103591
- Publication date
- 9 May 2026
- Language
- EN