IDEAS home Printed from https://ideas.repec.org/p/zbw/bubdps/324663.html
   My bibliography  Save this paper

Do G-SIBs engage in window-dressing behavior? An empirical analysis

Author

Listed:
  • Pliszka, Kamil
  • Schlam, Carina

Abstract

This paper examines whether global systemically important banks (G-SIBs) engage in window-dressing behavior to circumvent or reduce regulatory requirements, increasing vul- nerability to economic shocks. Using a comprehensive global bank sample, we uncover ev- idence of such practices: G-SIBs reduce year-end exposures used for G-SIB capital buffer calculations, by roughly twice the magnitude of non-G-SIBs, and reverse these cuts early the next year. This pattern is strongest among G-SIBs that are near bucket thresholds or subject to high G-SIB capital surcharges.

Suggested Citation

  • Pliszka, Kamil & Schlam, Carina, 2025. "Do G-SIBs engage in window-dressing behavior? An empirical analysis," Discussion Papers 19/2025, Deutsche Bundesbank.
    • Handle: RePEc:zbw:bubdps:324663
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/324663/1/1934796948.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Asli Demirguc-Kunt & Enrica Detragiache & Ouarda Merrouche, 2013. "Bank Capital: Lessons from the Financial Crisis," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45(6), pages 1147-1164, September.
    2. Agarwal, Vikas & Gay, Gerald D. & Ling, Leng, 2014. "Window dressing in mutual funds," CFR Working Papers 11-07 [rev.3], University of Cologne, Centre for Financial Research (CFR).
    3. Degryse, Hans & Mariathasan, Mike & Tang, Hien T., 2023. "GSIB status and corporate lending," Journal of Corporate Finance, Elsevier, vol. 80(C).
    4. Lakonishok, Josef, et al, 1991. "Window Dressing by Pension Fund Managers," American Economic Review, American Economic Association, vol. 81(2), pages 227-231, May.
    5. Mariathasan, Mike & Merrouche, Ouarda, 2014. "The manipulation of basel risk-weights," Journal of Financial Intermediation, Elsevier, vol. 23(3), pages 300-321.
    6. Antje Berndt & Darrell Duffie & Yichao Zhu, 2025. "The Decline of Too Big to Fail," American Economic Review, American Economic Association, vol. 115(3), pages 945-974, March.
    7. Wayne Passmore & Alexander H. von Hafften, 2019. "Are Basel's Capital Surcharges for Global Systemically Important Banks Too Small?," International Journal of Central Banking, International Journal of Central Banking, vol. 15(1), pages 107-156, March.
    8. Ng, Lilian & Wang, Qinghai, 2004. "Institutional trading and the turn-of-the-year effect," Journal of Financial Economics, Elsevier, vol. 74(2), pages 343-366, November.
    9. David K. Musto, 1999. "Investment Decisions Depend on Portfolio Disclosures," Journal of Finance, American Finance Association, vol. 54(3), pages 935-952, June.
    10. Moenninghoff, Sebastian C. & Ongena, Steven & Wieandt, Axel, 2015. "The perennial challenge to counter Too-Big-to-Fail in banking: Empirical evidence from the new international regulation dealing with Global Systemically Important Banks," Journal of Banking & Finance, Elsevier, vol. 61(C), pages 221-236.
    11. Jose A. Lopez, 1999. "Using CAMELS ratings to monitor bank conditions," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue jun.
    12. Allen, Linda & Saunders, Anthony, 1992. "Bank window dressing: Theory and evidence," Journal of Banking & Finance, Elsevier, vol. 16(3), pages 585-623, June.
    13. Taylor A. Begley & Amiyatosh Purnanandam & Kuncheng Zheng, 2017. "The Strategic Underreporting of Bank Risk," The Review of Financial Studies, Society for Financial Studies, vol. 30(10), pages 3376-3415.
    14. Favara, Giovanni & Ivanov, Ivan & Rezende, Marcelo, 2021. "GSIB surcharges and bank lending: Evidence from US corporate loan data," Journal of Financial Economics, Elsevier, vol. 142(3), pages 1426-1443.
    15. Behn, Markus & Schramm, Alexander, 2021. "The impact of G-SIB identification on bank lending: Evidence from syndicated loans," Journal of Financial Stability, Elsevier, vol. 57(C).
    16. Sebastian Schich & Oana Toader, 2017. "To Be or Not to Be a G-SIB: Does It Matter?," Journal of Financial Management, Markets and Institutions, Società editrice il Mulino, issue 2, pages 169-192.
    17. Aurélien Violon & Dominique Durant & Oana Toader, 2020. "The Impact of the Designation of Global Systemically Important Banks on Their Business Model," International Journal of Central Banking, International Journal of Central Banking, vol. 16(5), pages 95-142, October.
    18. Tirupam Goel & Ulf Lewrick & Aakriti Mathur, 2019. "Playing it safe: global systemically important banks after the crisis," BIS Quarterly Review, Bank for International Settlements, September.
    19. Vikas Agarwal & Gerald D. Gay & Leng Ling, 2014. "Window Dressing in Mutual Funds," The Review of Financial Studies, Society for Financial Studies, vol. 27(11), pages 3133-3170.
    20. Ouarda Merrouche & Asli Demirguk-Kunt & Enrica Detragiache, 2013. "Bank Capital: Lessons from the Crisis," Post-Print hal-01638076, HAL.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Markus Behn & Giacomo Mangiante & Laura Parisi & Michael Wedow, 2022. "Behind the Scenes of the Beauty Contest—Window Dressing and the G-SIB Framework," International Journal of Central Banking, International Journal of Central Banking, vol. 18(5), pages 1-42, December.
    2. Degryse, Hans & Mariathasan, Mike & Tang, Hien T., 2023. "GSIB status and corporate lending," Journal of Corporate Finance, Elsevier, vol. 80(C).
    3. Abbassi, Puriya & Iyer, Rajkamal & Peydró, José-Luis & Soto, Paul, 2020. "Stressed Banks? Evidence from the Largest-Ever Supervisory Review," EconStor Preprints 217048, ZBW - Leibniz Information Centre for Economics.
    4. Gong, Di & Huizinga, Harry & Li, Tianshi & Zhu, Jigao, 2023. "Goodhart’s law in China: Bank branching regulation and window dressing," Journal of Empirical Finance, Elsevier, vol. 74(C).
    5. Agarwal, Vikas & Ma, Linlin & Mullally, Kevin, 2015. "Managerial multitasking in the mutual fund industry," CFR Working Papers 13-10 [rev.], University of Cologne, Centre for Financial Research (CFR).
    6. Hung, Pi-Hsia & Lien, Donald & Kuo, Ming-Sin, 2020. "Window dressing in equity mutual funds," The Quarterly Review of Economics and Finance, Elsevier, vol. 78(C), pages 338-354.
    7. Luis Garcia & Ulf Lewrick & Taja Sečnik, 2023. "Window Dressing and the Designation of Global Systemically Important Banks," Journal of Financial Services Research, Springer;Western Finance Association, vol. 64(2), pages 231-264, October.
    8. Brown, Stephen J. & Sotes-Paladino, Juan & Wang, Jiaguo(George) & Yao, Yaqiong, 2017. "Starting on the wrong foot: Seasonality in mutual fund performance," Journal of Banking & Finance, Elsevier, vol. 82(C), pages 133-150.
    9. Agarwal, Vikas & Cao, Sean Shun & Huang, Shawn & Kim, Min, 2025. "Incentive realignment: Mutual funds' influence on executive compensation contracts," CFR Working Papers 25-08, University of Cologne, Centre for Financial Research (CFR).
    10. Teodor Dyakov & Marno Verbeek, 2019. "Can Mutual Fund Investors Distinguish Good from Bad Managers?," International Review of Finance, International Review of Finance Ltd., vol. 19(3), pages 505-540, September.
    11. Vikas Agarwal & Kevin A. Mullally & Yuehua Tang & Baozhong Yang, 2015. "Mandatory Portfolio Disclosure, Stock Liquidity, and Mutual Fund Performance," Journal of Finance, American Finance Association, vol. 70(6), pages 2733-2776, December.
    12. Imbierowicz, Björn & Rauch, Christian, 2024. "What drives startup valuations?," Journal of Banking & Finance, Elsevier, vol. 168(C).
    13. Luis Garcia & Ulf Lewrick & Taja Sečnik, 2021. "Is window dressing by banks systemically important?," BIS Working Papers 960, Bank for International Settlements.
    14. Guo, Xu & Gu, Chen & Zebedee, Allan A. & Chiu, Li-ting, 2024. "The effect of institutional herding on stock prices: The differentiating role of credit ratings," Journal of Banking & Finance, Elsevier, vol. 163(C).
    15. Sriya Anbil & Zeynep Senyuz, 2018. "The Regulatory and Monetary Policy Nexus in the Repo Market," Finance and Economics Discussion Series 2018-027, Board of Governors of the Federal Reserve System (U.S.).
    16. Jared Berry & Akber Khan & Marcelo Rezende, 2025. "How Do Global Systemically Important Banks Lower Capital Surcharges?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 67(3), pages 73-99, June.
    17. Gormley, Todd A. & Kaplan, Zachary & Verma, Aadhaar, 2022. "More informative disclosures, less informative prices? Portfolio and price formation around quarter-ends," Journal of Financial Economics, Elsevier, vol. 146(2), pages 665-688.
    18. Hanming Fang & Chang Liu & Li-An Zhou, 2020. "Window Dressing in the Public Sector: A Case Study of China’s Compulsory Education Promotion Program," NBER Working Papers 27628, National Bureau of Economic Research, Inc.
    19. Marco Migueis & Sydney Peirce, 2025. "Effect of the GSIB surcharge on the systemic risk posed by the activities of GSIBs," Finance and Economics Discussion Series 2025-029, Board of Governors of the Federal Reserve System (U.S.).
    20. Jun, Xiao & Li, Mingsheng & Yugang, Chen, 2017. "Catering to behavioral demand for dividends and its potential agency issue," Pacific-Basin Finance Journal, Elsevier, vol. 46(PB), pages 269-291.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:bubdps:324663. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/dbbgvde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.