Building Better Bad Banks: The Political Economy of Public Asset Management Companies for Resolving Financial Crises

• Applicant: Professor Mark Hallerberg, Ph.D.
• Subject Area: Political Science
• Term: from 2013 to 2019
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 220642283

• Final Report Year: 2018

Final Report Abstract

This project explored the politics concerning asset management corporations (AMCs), or bad banks. Its framework considered transparency, accountability, and the rules of the game. As we document for the first time, governments have created over 100 such bodies since the 1980s. Some were closed relatively quickly while others take on a life of their own. Moreover, there is considerable variance concerning the overall level of transparency of the supervisor and of the financial sector more generally that affects choices about AMCs. Particularly in Europe, it is difficult to get such information. For governments, the choice about whether to set up an AMC and, if so, in what form depends at least in part on the accounting treatment of the assets and liabilities of that body. In Japan, a change in the rules in the late 1990s encouraged the government to go the AMC route to address its financial crisis. In Europe, Eurostat rulings affected whether governments wanted an AMC and, if so, whether the AMC was majority privately owned. In the course of the work, we created an intuitive method to measure financial crises, which was critical for our work into the creation of AMCs and efforts by governments prior to elections to “stretch” their fiscal rules. In total, all work was co-written by the professor and post doctoral fellow.

Publications

• 2015. “"Does Banking Union Worsen the EU’s Democratic Deficit? The need for greater supervisory data transparency." Journal of Common Market Studies. 53(4): 769-785
  Gandrud, Christopher & Hallerberg, Mark
  
• 2015. “When All is Said and Done: Updating 'Elections, Special Interests, and Financial Crisis’.” Research and Politics. 2(3): 1-9
  Gandrud, Christopher & Hallerberg, Mark
  
• 2015. „Preventing German Bank Failures: Federalism and decisions to save troubled banks.“ Politische Vierteljahresschrift 56:2, 159–81
  Deo, Sahil; Franz, Christian; Gandrud, Christopher & Hallerberg, Mark
  
• 2016. “Statistical Agencies and Responses to Financial Crises: Eurostat, Bad Banks, and the ESM.” West European Politics. 39(3): 545-564
  Gandrud, Christopher & Hallerberg, Mark
  
• 2017. “Interpreting Fiscal Accounting Rules in the European Union.” Journal of European Public Policy. 25(6): 832-51
  Gandrud, Christopher & Hallerberg, Mark
  
• 2018. “Explaining Variation and Change in Supervisory Confidentiality in the European Union.” West European Politics. 41 (4): 1025-48
  Gandrud, Christopher & Hallerberg, Mark
  
• “The Measurement of Real-Time Perceptions of Financial Stress: Implications for Political Science.” British Journal of Political Science
  Gandrud, Christopher & Hallerberg, Mark
  
• 2018. “Financial Data Transparency, International Institutions, and Sovereign Borrowing Costs." International Studies Quarterly. 62 (1): 23-41
  Copelovitch, Mark; Gandrud, Christopher & Hallerberg, Mark