The Impact of Policy Interventions on Systemic Risk across Banks

Simona Nistor and Steven Ongena
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Simona Nistor: Babes-Bolyai University - Department of Finance

No 20-101, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: What is the impact of policy interventions on the systemic risk of banks? To answer this question, we analyze a comprehensive sample that combines bank-specific bailout events with balance sheets of key affected and non-affected European banks between 2008 and 2014. We find that guarantees reduce the systemic risk contribution made by small banks in the short run and by small or less liquid banks in the long run. Recapitalizations immediately decrease banks’ systemic importance, but the effect is also short-lived. Liquidity injections may even significantly increase systemic risk especially when administered to the less capitalized or highly profitable banks.

Keywords: systemic risk; policy interventions; risk profile; Conditional Value at Risk; G-SIBs (search for similar items in EconPapers)
JEL-codes: E58 G01 G21 G28 H81 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2020-12
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eec, nep-mac and nep-rmg
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: The Impact of Policy Interventions on Systemic Risk across Banks (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp20101

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