The Long Shadow of the Global Financial Crisis: Public Interventions in the Financial Sector

By Deniz O Igan, Hala Moussawi, Alexander F. Tieman, Aleksandra Zdzienicka, Giovanni Dell'Ariccia, Paolo Mauro

July 30, 2019

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Deniz O Igan, Hala Moussawi, Alexander F. Tieman, Aleksandra Zdzienicka, Giovanni Dell'Ariccia, and Paolo Mauro. The Long Shadow of the Global Financial Crisis: Public Interventions in the Financial Sector, (USA: International Monetary Fund, 2019) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

We track direct public interventions and public holdings in 1,114 financial institutions over the period 2007–17 in 37 countries based on publicly available information. We use aggregate official data to validate this new dataset and estimate the fiscal impact of interventions, including the value of asset holdings remaining in state hands at end-2017. Direct public support to financial institutions amounted to $1.6 trillion ($3.5 trillion including guarantees), with larger amounts allocated to lower capitalized and less profitable banks. As of end-2017, only a few countries had fully divested the initial support they provided during the crisis. Public holdings were divested faster in better capitalized, more profitable, and more liquid banks, and in countries where the economy recovered faster. In countries where the government stake remained high relative to the initial intervention, private investment and credit growth were slower, financial access, depth, efficiency, and competition were worse, and financial stability improved less.

Subject: Asset and liability management, Banking, Economic sectors, Financial institutions, Financial sector, Liquidity, Loans, State-owned banks, Stocks

Keywords: Asset holding, Asset purchase, Asset quality, Bank characteristic, Bank resolution, Bank variable, Cash flow, Country condition, Financial crisis, Financial sector, Global, Government intervention, Government interventions, Intervened bank, Liquidity, Loans, Return on assets, State-owned banks, Stocks, System assets, WP

Publication Details

Pages:

90
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/164
Stock No:

WPIEA2019164
ISBN:

9781513508337
ISSN:

1018-5941

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