Home  Journals  Digest Finance  2(242) - 2017 April-June

Bail-In and Prospects for Application in Russia

Vol. 22, Iss. 2, JUNE 2017

Article PDF Version

Received: 20 June 2016

Received in revised form: 2 December 2016

Accepted: 19 December 2016

Available online: 15 June 2017

Subject Heading: Banking

JEL Classification: G21, G28

Pages: 187-195

https://doi.org/10.24891/df.22.2.187

Importance The article analyzes the practices and trends in using the bail-in mechanism in the world.
Objectives The aim is to review the possibility of applying the bail-in mechanism in Russia and its efficiency based on the analysis of best practices, consider alternatives and influence of the mechanism on rating of financial institutions.
Methods The study draws on general and specific methods of scientific knowledge, i.e. empirical investigation (comparison, data collection and analysis), comparative examination, and synthesis of theoretical and practical material. To process and systematize the information, I used grouping, classification and a systems approach.
Results The study reveals that the new rules are intended to streamline the system of troubled banks' restructuring and liquidation. The bail-in mechanism has appeared recently, therefore, the experience in its application is not extensive.
Conclusions and Relevance It is not clear yet how to determine the date and amount of conversion. The issue of the price of funds conversion into equity is controversial. Another complex issue is the impact of bail-in on the rating assigned by international agencies.

Keywords: bail-in, Deposit Insurance Agency, rating, bailout, financial restructuring

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