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Despite a raft of important qualitative reservations and at best poor empirical evidence, the argument that, in case of business problems, large banks are more likely to be bailed out by government intervention than smaller banks (‘too big to fail’) cannot be dismissed entirely. The question, though, is whether or to what extent this has any implications for competition or the stability of the banking system. Under realistic assumptions, especially with respect to incentives for bank management and shareholders, too big to fail hardly leads to excessive risk taking by large banks. The impact of too big to fail on a bank's rating and, accordingly, its refinancing conditions is only marginal, as a breakdown of the various rating components clearly documents. This suggests that the effects on competition of too big to fail come nowhere close to the refinancing advantages enjoyed by public sector banks in Germany. The refinancing advantage of the Landesbanken afforded by state guarantees (Anstaltslast and Gewährtragerhäftung) comes to as much as 50 basis points. Given the continual narrowing of lending margins, an advantage on this scale plays a decisive role in competition. Too big to fail has substantial implications for the architecture of banking supervision. Suitable institutional arrangements need to be created in order to deal with large banks in case of a, potentially systemic, crisis. With banking becoming increasingly global and the number of cross‐border mergers on the rise, this requires solutions at an international, if not at a global, level. Implementing the concept of a European Liko‐Bank, as suggested by the Bundesbank, will require that the supervisory authorities and the European System of Central Banks (ESCB) first create appropriate public sector counterparts.

This paper aims to highlight the shift of impunity from institutions to individuals within the “too big to fail, too big to jail” paradigm and to restore individual liability in the financial industry.

The paper is based on the analysis of HSBC deferred prosecution agreement concluded on December 10, 2012 and of a report by the US House of Representatives Financial Committee released in July 2016.

“Too big to fail, too big to jail” is a paradigm which contains justice. It leads to the impunity of individuals involved due to the absence of trial. Containment of justice is denial of justice. However, the systemic risk is attached to institutions, not to individuals. Therefore, it should not hamper the prosecution of individuals.

Setting sanctions applicable to individuals and proportionate to the crime would contribute to deter financial misconducts.

The value of the paper is the demonstration that there is no basis for a limited personal liability in the financial industry.

Outlines the US development of the “too‐big‐to‐fail” (TBTF) doctrine following the collapse of the Continental Illinois Bank, reviews relevant research and explores the impact on the efficiency of the banking system. Uses 1983‐1985 call report data, explains the methodology and presents the results, which analyse economies and diseconomies of scope and scale between different types of loans; and levels of inefficiency for TBTF and non‐TBTF banks. Shows that TBTF banks had the greatest increase in inefficiency following Continental’s failure but reduced this in the following year, as did small banks which did not benefit from complete depository coverage. Confirms that the TBTF doctrine increased stability for all banks, but particularly those covered by the doctrine.

The purpose of this paper is to examine the implicit subsidies received, in the form of stock market returns, from the perception that large banking organizations are too big to fail, and implications for financial regulation.

The empirical analysis focuses on the responses of stock prices of various size groups of banking organizations to announcement of government capital injections to banks (troubled assets relief program) during the 2008 financial crisis, and summarizes responses of regulatory authorities to the crisis.

The paper finds positive and statistically significant stock return reactions both for a portfolio of the large banking organizations that are part of the initial capital injection plan and a portfolio of the large banking organizations that are not part of the initial capital injection plan, implying a too‐big‐to‐fail (TBTF) effect, especially for the latter group of institutions.

The paper focuses on a short time frame of stock price reactions to specific events, for the largest US banks. Further examination of longer‐term stock price effects on US as well as foreign banks may be of interest.

The results have implications for the manner and scope of financial regulatory actions and changes in regulators' approaches to systemic risk and individual bank regulation.

The paper examines TBTF bank subsidy effects in response to a rapidly unfolding financial crisis. These have implications for longer term responses, particularly in the regulatory sphere.

This paper analyses English Premier League (EPL) and English Football League (EFL) championship clubs during the period 2002–2019 to anticipate financial distress with specific reference to footballs' Financial Fair Play (FFP) regulations.

Data was collected for 43 professional football clubs competing in the EPL and Championship for the financial year ends 2002–2019. Analysis was conducted using the Z-score methodology and additional statistical tests were conducted to measure differences between groups. Data was split into two distinct periods to analyse club finances pre- and post-FFP.

The results show significant cases of financial distress amongst clubs in both divisions and that Championship clubs are in significantly poorer financial health than EPL clubs. In some cases, financially sustainability has worsened post-FFP. The “big 6” clubs – due to their size – seem to be more financially sound than the rest of the EPL, thus preventing a “too big to fail” effect. Overall, the financial situation in English football remains poor, a position that could be exacerbated by the economic crisis, caused by COVID-19.

The findings are not generalisable outside of the English football industry and the data is susceptible to usual accounting techniques and treatments.

The paper recommends a re-distribution of broadcasting rights, on a more equal basis and incentivised with cost-reduction targets. The implementation of a hard salary cap at league level is also recommended to control costs. Furthermore, FFP regulations should be re-visited to deliver the original objectives of bringing about financial sustainability in European football.

The paper extends the evidence base of measuring financial distress in professional team sports and is also the first paper of its kind to examine this in relation to Championship clubs.

This paper aims to examine whether credit ratings of banks are related to their location, i.e. inside or outside the Euro Area.

The authors estimate a multilevel ordered probit model for banks’ credit ratings in 2011 and control for bank-specific factors. They use the overall ratings and the external support ratings provided by Fitch as the dependent variable.

Banks located in Euro Area member countries, on average, receive a higher credit rating from Fitch than banks located outside the Euro Area. Evidence for a “too-big-to-fail” and a “too-big-to-rescue” effect was also found.

The monetary union effect on banks’ credit ratings may be affected by the period under investigation. The ratings refer to August 2011, when the European sovereign debt crisis was at its height. This implies that, if anything, the Economic and Monetary Union (EMU) effect is underestimated.

Large banks in the Euro Area receive higher credit ratings, so they have a competitive advantage over small banks located outside the Euro Area.

The present evidence suggests that small European countries with an extensive banking sector will be better off if they are member of the European EMU.

The relationship between location of banks and their credit ratings has hardly been researched before. The present evidence is directly related to a debate in the literature on this issue.

The purpose of this paper is to investigate whether European banks use commission and fee income (CF) to smooth reported earnings or to persistently increase reported earnings as an income-increasing earnings management strategy.

The author tests the income-smoothing hypothesis following the approach of Stubben (2010) and Ahmed et al. (1999).

The author finds that European banks use CF to smooth reported earnings and this behaviour is pronounced among non-too-big-to-fail (NTBTF) European banks compared to too-big-to-fail (TBTF) European banks. The author also finds a positive and significant correlation between interest income and non-interest income (CF) indicating increased systematic risk due to reduced diversification benefits. The author also finds that the CF of NTBTF banks is procyclical with fluctuating economic conditions but not for TBTF banks. Also, the author finds evidence for income-increasing earnings management in the post-crisis period, for larger European banks and when banks have higher ex post interest income, implying that the propensity to engage in income-increasing earnings management significantly depends on bank size and ex post interest margin considerations. The findings have policy implications.

The author examines alternative financial numbers that banks use to manage earnings. The author focusses on income smoothing via CF among European banks, a context that has not been explored in the literature.