An Investigation of the Legal Aspects of the Insolvency of Internationally Active Banks

Banks are the most influential players in the economic arena of the countries in a way that they become the governments’ instrument for implementation of the financial and monetary policies. The free market policy has opened up the market for activities of the bank beyond the place of establishment. The growth and expansion of the multinational banks in the past century have created new problems. One of the most important issues is the insolvency of such internationally active banks which requires an academic investigation to be carried out to unfold the reasons behind such bank failures. Laws of many countries have not dealt with such an eventuality and for this reason, at the time of international banking crises, the effects of bank insolvency spread throughout the world. The principles of separation or unity of the legal personalities of the banks and their subsidiaries and the principle of equal treatment among all creditors as a matter of conflict of laws related to the bank insolvency help to find out the most sensible substantive law in this field. International documents and regulations have provided a proper base for international cooperation among all the countries involved. This cooperation helps to avoid international and domestic financial crises.