"Too big to fail" or "Too non-traditional to fail"?: The determinants of banks' systemic importance
AbstractThis paper empirically analyzes the determinants of banks' systemic importance. In constructing a measure on the systemic importance of financial institutions we find that size is a leading determinant. This confirms the usual "Too big to fail'' argument. Nevertheless, banks with size above a sufficiently high level have equal systemic importance. In addition to size, we find that the extent to which banks engage in non-traditional banking activities is also positively related to banks' systemic importance. Therefore, in addition to ``Too big to fail", systemically important financial institutions can also be identified by a "Too non-traditional to fail" principle.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 45589.
Date of creation: 23 Feb 2013
Date of revision:
Too-big-to-fail; systemic importance; systemic risk; non-traditional banking; extreme value theory;
Find related papers by JEL classification:
- G01 - Financial Economics - - General - - - Financial Crises
- G2 - Financial Economics - - Financial Institutions and Services
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-30 (All new papers)
- NEP-BAN-2013-03-30 (Banking)
- NEP-CBA-2013-03-30 (Central Banking)
- NEP-RMG-2013-03-30 (Risk Management)
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