A model for regulatory intervention in Irish banking

O’Sullivan, K.P.V.; Kennedy, Tom D.

doi:10.1057/palgrave.jbr.2350043

Cited by 6 publications

(3 citation statements)

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“…At that time, an interest rate cartel existed as a key factor affecting competition. Additionally, the Irish Central Bank controlled new entrants in the Irish banking system meaning that entry was practically unattainable except by way of a takeover (O'Sullivan and Kennedy, 2007). Ironically, many of the regulatory restrictions, that were designed to protect the stability of the banking system, were removed as well as artificial distinctions between different levels of financial institutions in the 1990s.…”

Section: Irish Banking Regulatory Environment and Practicementioning

confidence: 99%

“…The liberalisation of the Irish banking system together with a relaxation of entry requirements to the Irish Payment Clearing System (O'Sullivan and Kennedy, 2007), facilitated the entry of a number of international banks to the domestic market. These included the Royal Bank of Scotland (RBS), Halifax Bank of Scotland, Rabobank and Danske Bank.…”

Section: Irish Banking Regulatory Environment and Practicementioning

confidence: 99%

“…These practices resulted in unprecedented profit growth for domestic and foreign financial institutions in Ireland (O'Sullivan and Kennedy, 2007). Banks and most Irish commentators believed that such strategies were justified as nominal householder wealth had increased by 21 per cent from 2002 to 2007 (Department of the Environment, Heritage and Local Government, 2009) and that most of the macroeconomic variables of the Irish economy were fundamentally sound.…”

Section: Banking Practices In Irelandmentioning

confidence: 99%

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What caused the Irish banking crisis?

O’Sullivan

Kennedy

2010

Journal of Financial Regulation and Compliance

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PurposeThe purpose of this paper is to explore the Irish banking crisis and explain how various factors contribute to a collapse in asset prices, an economic recession and the near failure of the banking system. The paper seeks to document the dangers of pro‐cyclical monetary and government policies, particularly in an environment of benign financial regulation and pent‐up demand for credit.Design/methodology/approachThe paper maps the Irish banking crisis against its general background. It describes the roots of the crisis, with particular attention given to government and monetary policies, the practices of the financial regulator and banks during the property bubble, together with the difficulties associated with the international sub‐prime crisis.FindingsWhile the global financial crisis exacerbated matters, the banking crisis in Ireland was largely a home‐grown phenomenon. The crisis stemmed from the collapse of the domestic property sector and subsequent contraction in national output. Its root cause can be found in the inadequate risk management practices of the Irish banks and the failure of the financial regulator to supervise these practices effectively.Originality/valueThe paper documents the “Celtic Tiger” phenomenon of the last decade: the Irish economic and property miracle, its sharp decline, and the sub‐prime crisis. It delineates one of the most severe banking and economic crisis in a developed country since the great depression with a number of key policy lessons for rapidly expanding economies.

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Section: Irish Banking Regulatory Environment and Practicementioning

confidence: 99%

Section: Irish Banking Regulatory Environment and Practicementioning

confidence: 99%

Section: Banking Practices In Irelandmentioning

confidence: 99%

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