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The rise and fall of universal banking: ups and downs of a sample of large and complex financial institutions since the late ‘90s

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  • Sergio Masciantonio

    ()
    (Banca d'Italia)

  • Andrea Tiseno

    ()
    (Banca d'Italia)

Abstract

We document the development of the major international banks since the late 1990s, analysing balance-sheet data for 27 large and complex financial institutions. We argue that balance-sheet expansion and business line diversification paved the way for the rise of the universal banking model. This model, apparently sound and efficient in the run-up to the crisis, revealed all its shortcomings when the crisis erupted. European banks displayed greater fragilities in their business models. The changed financial and regulatory landscape that followed has challenged this model further. Many proposed remedies to the global financial crisis appear to push for a return to a narrower model for banking activity.

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Bibliographic Info

Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Questioni di Economia e Finanza (Occasional Papers) with number 164.

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Date of creation: Jun 2013
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Handle: RePEc:bdi:opques:qef_164_13

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Keywords: banks; banking crises; financial crises; balance sheets;

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  11. Paul De Grauwe, 2009. "Lessons from the Banking Crisis: A Return to Narrow Banking," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 7(2), pages 19-23, 07.
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  13. Carmen M. Reinhart & Kenneth S. Rogoff, 2008. "Is the 2007 U.S. Sub-Prime Financial Crisis So Different? An International Historical Comparison," NBER Working Papers 13761, National Bureau of Economic Research, Inc.
  14. Fabio Panetta & Thomas Faeh & Giuseppe Grande & Corrinne Ho & Michael King & Aviram Levy & Federico M. Signoretti & Marco Taboga & Andrea Zaghini, 2009. "An assessment of financial sector rescue programmes," Questioni di Economia e Finanza (Occasional Papers) 47, Bank of Italy, Economic Research and International Relations Area.
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