Contrary to literature on the prevention of bank crisis which is very developed, literature on bank resolution policies and insolvency law is still relatively small even if academic interest is growing. Because of the systemic repercussions of bank crisis which can dramatically affect both financial and real sectors, banks are subject to specific supervision and regulation by prudential
... [Show full abstract] authorities. The whole system of banking regulation is designed to induce a bank behaviour which makes insolvency relatively unlikely. Nonetheless, despite these prudential efforts, bank insolvency may arise and needs specific rules in order to be resolved. The need for such a reflection on banking resolution proceedings is nowadays exacerbated by the growing movement of bank consolidation both national and cross-border. Moreover this consolidation is also a cross-sector phenomenon characterized by the emergence of large financial conglomerates combining banking, insurance and securities business in a same group. These tendencies are now well documented and increase the potential for spill over effects of bank failure (De Nicolo and alii 2003, Schoenmaker D and Oosterloo, 2005). So, not only do we have to estimate the adequacy of national bank insolvency regime, but also the mutual compatibility between the different proceedings across countries, especially at the European level (even if a Directive on the reorganization and winding up of credit institutions exists). This paper investigates the various issues related to the treatment of bank insolvencies. In a first part, by adopting a theoretical point of view, we explain why bank failures are different from failures of other companies and hence we argue in favour of a special bank insolvency regime distinct from the general insolvency law. Empirically, the fact that bank liquidation option are rare compared to the frequency of bank reorganization may be 1 JEL Classification : G2, K2 2 Professor of Economics, University Paris 10 Nanterre, EconomiX. Laurence.scialom@u-paris10.fr.