Of Bailouts and Rescue Measures: Subsidies in Financial Services

22 Pages Posted: 9 May 2014

See all articles by Panos Delimatsis

Panos Delimatsis

Tilburg Law and Economics Center (TILEC); Tilburg Law School

Date Written: April 1, 2012

Abstract

As the recent financial crisis started unfolding, governments intervened through substantive subsidies and other benefits towards financial institutions to avoid their collapse. In addition, various stimulus packages were endorsed to rescue various sectors of the economy, including the financial sector, thereby creating possible distortions and unfair advantages for certain service suppliers. After a review of the measures taken which are dubious from a WTO perspective, this paper intends to examine the current legal discipline within the WTO and to assess the bite of the relevant legal provisions under the General Agreement on Trade in Services (GATS) absent any meaningful provisions relating to subsidies in the service sector. As financial reform at the domestic level takes shape, the time appears to be ripe for the conclusion of the negotiations on subsidies and safeguards within the GATS. In the meantime, close monitoring of the subsidized banks and the new players that emerged from mergers among financial institutions is required to ensure that no market distortions are maintained in the post-crisis landscape.

Keywords: Bailouts, subsidies in services, financial sector, General Agreement on Trade in Services, financial crisis

JEL Classification: F13, G01, G15, G18, G21, G24, K33, O31

Suggested Citation

Delimatsis, Panagiotis, Of Bailouts and Rescue Measures: Subsidies in Financial Services (April 1, 2012). Tilburg Law School Research Paper No. 13/2014, Available at SSRN: https://ssrn.com/abstract=2434102 or http://dx.doi.org/10.2139/ssrn.2434102

Panagiotis Delimatsis (Contact Author)

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Postbus 90153
Tilburg, NL-5000 LE
Netherlands
0031 13 466 8251 (Phone)
0031 13 466 8047 (Fax)

HOME PAGE: http://www.tilburguniversity.edu/staff/p-delimatsis

Tilburg Law School ( email )

Warandelaan 2
Postbus 90153
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://https://www.tilburguniversity.edu/staff/p-delimatsis

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