Comparative Economic Studies

, Volume 56, Issue 2, pp 295–312 | Cite as

Learning from the Irish Experience – A Clinical Case Study in Banking Failure

  • Brian M Lucey
  • Charles Larkin
  • Constantin Gurdgiev
Symposium Article


We present a review of the Irish banking collapse, detailing its origins in a confluence of events. We suggest that the very concentrated nature of the Irish banking sector, which will emerge from the policy decisions taken as a consequence of the collapse, runs a risk of a second crisis. We survey the literature on size and efficiency and suggest some alternative policy approaches.


banking Ireland regulation collapse 

JEL Classifications

G21 G28 


  1. Ahern, A . 2009: Nationalised banks will find it harder to get international funds. The Irish Times 25 April,
  2. Alsakka, R, Gwilyam, O and Vua, T . 2013: Bank and sovereign credit ratings during the European debt crisis, Bangor Business School, Bangor University, April,
  3. Bloomberg. 2013: Fitch affirms Bank of Ireland support-driven ratings,
  4. Carbó-Valverde, S, Kane, EJ and Rodriguez-Fernandez, F . 2013: Safety-net benefits conferred on difficult-to-fail-and-unwind banks in the US and EU before and during the great recession. Journal of Banking and Finance 37 (6): 1845–1859.CrossRefGoogle Scholar
  5. Carow, KA, Kane, EJ and Narayanan, RP . 2011: Safety-net losses from abandoning glass-steagall restrictions. Journal of Money, Credit and Banking 43 (7): 1371–1398.CrossRefGoogle Scholar
  6. Carswell, S . 2012: Anglo republic. Penguin: Dublin.Google Scholar
  7. Cebenoya, C, Cooper, E and Register, C . 1993: The relative efficiency of stock versus mutual S&Ls: A stochastic frontier approach. Journal of Financial Services Research 7 (1993): 151–170.CrossRefGoogle Scholar
  8. CECOP. 2013: CECOP answer to the European Commission consultation on the Green Paper ‘Long-term financing of the European economy’ 24 June,
  9. Chortareas, GE, Girardone, C and Ventouri, A . 2011: Financial frictions, bank efficiency and risk: Evidence from the Eurozone. Journal of Business Finance & Accounting 38 (1–2): 259–287.CrossRefGoogle Scholar
  10. Claessens, S and Laeven, L . 2004: What drives bank competition? Some international evidence. Journal of Money, Credit and Banking (2004): 563–583.Google Scholar
  11. Cooper, M . 2010: Who really runs Ireland. Penguin: Dublin.Google Scholar
  12. Dam, L and Koetter, M . 2011: Bank bailouts, interventions, and moral hazard. Deutsche Bundesbank, Discussion Paper, Series 2: Banking and Financial Studies No 10/2011,
  13. Fahlenbrach, R, Prilmeier, R and Stulz, RM . 2012: This time is the same: Using bank performance in 1998 to explain bank performance during the recent financial crisis. Journal of Finance 67 (6): 2139–2185.CrossRefGoogle Scholar
  14. Fitzpatrick, T and Quinn, K . 2005: Cost efficiency in UK and Irish credit institutions. Economic and Social Review 36 (1): 45–66.Google Scholar
  15. Flageole, M and Roy, J . 2005: Rating cooperative and commercial bank bonds: A comparative approach. Annals of Public and Cooperative Economics 76 (3): 407–435.CrossRefGoogle Scholar
  16. Girardone, C, Nankervis, J and Velentza, E . 2009: Efficiency, ownership and financial structure in European banking. Managerial Finance 35 (1): 227–245.CrossRefGoogle Scholar
  17. Gropp, R, Hakenes, H and Schnabel, I . 2011: Competition, risk-shifting, and public bail-out policies. Review of Financial Studies 24 (6): 2084–2120.CrossRefGoogle Scholar
  18. Gurdgiev, C, Lucey, BM, MacAnBhaird, C and Roche-Kelly, L . 2011: The Irish economy: Three strikes and you’re out? Panoeconomicus (formerly World Development) 58 (1): 19–41.CrossRefGoogle Scholar
  19. Haldane, A . 2012: On being the right size 25 October,
  20. Hughes, J and Mester, L . 2011: Who said large banks don’t experience scale economies? Evidence from a risk-return-driven cost function. Working papers 11–27, Federal Reserve Bank of Philadelphia: Philadelphia.Google Scholar
  21. IMF. 2013a: Financial sector assessment program European Union progress with bank restructuring and resolution in Europe. Technical Note. March.Google Scholar
  22. IMF. 2013b: Financial system stability assessment, March.Google Scholar
  23. IMF. 2013c: European Union: Publication of financial sector assessment program. New York, IMF Country Report no. 13/67.Google Scholar
  24. Kane, EJ . 2011: Unmet duties in managing financial safety nets. Business Ethics Quarterly 21 (1): 1–22.CrossRefGoogle Scholar
  25. Kane, EJ . 2012: Missing elements in US financial reform: A Kübler-Ross interpretation of the inadequacy of the Dodd-Frank Act. Journal of Banking and Finance 36 (3): 654–661.CrossRefGoogle Scholar
  26. Lucey, BM . 1993: Profits, efficiency and Irish banks. Journal of the Statistical and Social Inquiry Society of Ireland 27 (1): 31–73.Google Scholar
  27. Mahon, A . 2012: The Final Report of the Tribunal of Enquiry into Certain Planning Matters and Payments. Dublin: Department of Justice, p. 1473.Google Scholar
  28. McKillop, D and Wilson, JO . 2011: Credit unions: A theoretical and empirical overview. Financial Markets, Institutions & Instruments 20: 79–123.CrossRefGoogle Scholar
  29. Mercille, J . 2013: The role of the media in sustaining Ireland’s housing bubble. New Political Economy (in press) 1–20.Google Scholar
  30. Noss, J and Sowerbutts, R . 2012: The implicit subsidy of banks. Financial Stability paper no. 15. May, Bank of England.Google Scholar
  31. Onder, Z and Ozyildirim, S . 2011: Political connection, bank credits and growth: evidence from Turkey. The World Economy 34 (6): 1042–1065.CrossRefGoogle Scholar
  32. Papadopoulos, S . 2010: New evidence on banking efficiency in Europe. International Journal of Monetary Economics and Finance 3 (3): 280–299.CrossRefGoogle Scholar
  33. Regling, K and Watson, M . 2010: A preliminary report on the sources of Ireland’s banking crisis. Central Bank of Ireland,'s%20Banking%20Crisis%2031%20May%202010.pdf.
  34. Rojas, J-P . 2013: Co-operative Bank stops new corporate loans. Independent 24 May,
  35. S&P. 2013: Credit FAQ: The ongoing ties between the Irish sovereign and its banks,
  36. Schaeck, K, Cihak, M and Wolfe, S . 2009: Are competitive banking systems more stable? Journal of Money, Credit and Banking 41 (4): 711–734.CrossRefGoogle Scholar
  37. Shen, C-H and Lin, C-Y . 2012: Why government banks underperform: A political interference view. Journal of Financial Intermediation 21 (2): 181–202.CrossRefGoogle Scholar
  38. Ueda, K and Weder di Mauro, B . 2012: Quantifying structural subsidy values for systemically important financial institutions. New York. IMF Working paper 12/128.Google Scholar

Copyright information

© Association for Comparative Economics 2014

Authors and Affiliations

  • Brian M Lucey
    • 1
    • 2
    • 3
    • 4
  • Charles Larkin
    • 5
    • 6
  • Constantin Gurdgiev
    • 5
  1. 1.School of Business, Trinity CollegeDublinIreland
  2. 2.Institute for International Integration Studies (IIIS), The Sutherland CentreDublinIreland
  3. 3.Glasgow Business School, Glasgow Caledonian UniversityLanarkshireUK
  4. 4.Faculty of Economics, University of LjubljanaLjubljana 1000Slovenia
  5. 5.School of Business and Institute for International Integration Studies, Trinity CollegeDublinIreland
  6. 6.Cardiff School of Management, Cardiff Metropolitan UniversityCardiffUK

Personalised recommendations