Public funding of failing banks in the European Union (LBF vol. 19) 2020/1.3.3:1.3.3 Research methodology

Public funding of failing banks in the European Union (LBF vol. 19) 2020/1.3.3

1.3.3 Research methodology

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The first three chapters of this dissertation (Part 1) address descriptive analysis issues by (1) describing what a bank is and what a balance sheet of a bank looks like, and (2) reviewing and structuring the information that is available on the State aid regime and resolution framework for the banking sector in order to prepare for the assessment in Part 2: how the resolution framework and the State aid regime for the banking sector contribute to regulating public funding of failing banks in the EU.

Both the resolution framework and the State aid regime for the banking sector have been covered in many publications. Nonetheless, the author has decided to cover both frameworks extensively in this dissertation for two reasons. The first reason, is that a good understanding of both frameworks is key for understanding the analysis that is made in Part 2 of the impact that the resolution framework has on the regulation of public funding of failing banks in the EU, as originally only covered by the State aid regime for the banking sector. Taking into account that scholars and practitioners focus – most of the time – only on one of the two frameworks, this dissertation describes both frameworks to cater for any gaps in the necessary knowledge to understand the consequences of the co-existence of both frameworks. The second reason, is that by structuring the information that is available on the State aid regime and resolution framework for the banking sector in Chapter 3 and Chapter 4 in the exact same way, it provides for the possibility to make an assessment of coherence between the resolution framework and State aid regime for the banking sector. This is a relevant assessment considering the – potential – further integration of both frameworks in the future. The assessment in this dissertation is focused on the coherence between both frameworks in respect of the three research lines. A coherence assessment can however also be made on other aspects, such as legal outline, geographical scope, material scope or group application.

The last three chapters of this dissertation (Part 2) address both descriptive analysis issues and normative analysis issues by (3) describing the way in which the State aid regime for the banking sector is amended and complemented by the resolution framework, (4) analysing the impact thereof on the access to public funding as a remedy for failing banks, on the exercise of State aid control by the Commission and on the restructuring process of a failing bank and (5) identifying any hurdles, tensions and challenges that result from this impact.

The sources that are used for this dissertation range from the European legal framework – consisting of treaties, regulations, directives, communications, guidelines, policy documents and other soft law instruments -- to publications from EU institutions, jurisprudence and relevant literature. In addition, the State aid decisions taken by the Commission for the banking sector, the decisions taken by the national resolution authorities and the SRB in relation to the resolution of banks and the decisions by the ECB with respect to the assessment whether a bank is failing or likely to fail are analysed. With respect to the State aid decisions taken by the Commission, the author has created a database of all the decisions taken during and after the GFC in the banking sector in order to be able to search the decisions.

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