The determinants of systemic importance

Kyle Moore and Chen Zhou ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper empirically analyses the determinants of banks’ systemic importance. With applying a novel measure on the systemic importance to US bank holding companies in 2000–2010, we show that size is an important determinant of systemic importance, but banks with size above a certain threshold have equal systemic importance. On top of size, engaging heavily in non-traditional banking activities, such as relying on money market fund and generating non-interest income, is also related to high 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.

Keywords: too-big-to-fail; systemic risk; extreme value theory (search for similar items in EconPapers)
JEL-codes: G00 G21 G28 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2014-08-07
New Economics Papers: this item is included in nep-ban and nep-rmg
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:59289

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