Banking crises in the Euro area : from bail-ins to bail-outs and the setup of the banking union

Abstract

This dissertation will discuss banking crises in the Eurozone area where great changes have been seen in the last ten years. The financial crisis of 2008 followed by the sovereign debt crisis in Europe helped to create the Banking Union and its mechanisms to become a key player within a banking crisis. One should be aware and understand how was the Banking Union created and what contributions did it bring out regarding bank resolutions.

This shall be done through a comparative case study methodology using qualitative data analysis. One shall be using three cases to answer the research questions presented in this dissertation. The cases will describe the timeline of events that specific banks had to go through during these crises. The banks to be discussed are French-Belgian Dexia Bank, Cypriot Laiki Bank and the Italian Banca Monte dei Paschi di Siena.

The findings from this case study analysis show that a Banking Union within the EU was needed to be established and operate. It is also apparent that the most preferred package of aiding banks is through the form of a bail-out. From these findings, one can recommend new methods to further implement a fuller integration of financial supervision with the European Union.