Time: 13:00-15:00 (UK Time), Wednesday, 7 June 2023
Presenter: Professor Victor Murinde, SOAS University of London
Chair: Professor Victor Murinde, SOAS University of London
Online Venue: Click here to join the seminar on Microsoft Teams (For any inquiry about how to join the online seminar, please contact Dr. Athina Petropoulou: ap102@soas.ac.uk)

Abstract
We investigate whether government bailouts, post the global financial crisis (2007-08), were helpful in reducing systemic risk in European banks. We focus on the distinguishing features of European banks as they differ from their US counterparts in terms of concentration, liquidity and capital ratios. We apply multivariate extreme value theory (EVT) in measuring systemic risk that has never been used in this literature. We invoke difference-in-difference methodology to examine the impact of bailout programmes on systemic risk in bailout banks versus non-bailout banks. We find that the bailout packages attenuated the transmission of systemic risk to European banks for both large and small banks and for high liquid and low liquid banks. However, pronounced reduction in systemic risk is only associated with highly capitalised banks. Our findings are robust to endogeneity issue and selection bias and offer policy implications regarding the usefulness of bailout programmes for financial stability.

JEL codes: G18, G21, G28, C49

Keywords: risk analysis, bailouts, banking, systemic risk, financial crises, multivariate extreme value theory

Co-authors: Sajid M. Chaudhry, Aston University, UK; Samuel Fosu, University of Sussex, UK; Wasim Ahmad, Cranfield University, UK

Presenter

Victor Murinde (PhD, FRSA, FAcSS) holds the AXA Chair in Global Finance and is the Founding Director of the Research Centre for Global Finance, at the School of Finance and Management, SOAS University of London. He is a Fellow of the Royal Society of Arts; he is also a Fellow of the Academy of Social Sciences. He has contributed over 100 research papers, mainly in the area of banking and finance. According to the UK Research Excellence Framework (REF2014), his research on “Shaping Bank Regulatory Reforms in Africa” was recognised for exceptional impact. He is the Principal Investigator of a DFID-ESRC Research Grant on “Inclusive Finance”, 2016-2021, leading a consortium of: SOAS University of London; University of Birmingham; Columbia University; University of Sussex; University of Nottingham; ODI London; University of Groningen; Laval University; University of Ghana, Legon; & the African Economic Research Consortium (AERC). His other roles include: Chair of Group C (Finance) for the AERC; Council Member of British Institute in Eastern Africa; and Visiting Professor of Financial Economics at the School of Economics, University of Nairobi. He was Chair, Econometric Society Africa Region Standing Committee, 2014-2018. Also, he was the founding Director of the African Development Institute, at the African Development Bank, 2011-2014.