Global systemically important banks regulation: Blessing or curse?

Stelios Markoulis, Spiridon Martzoukos and Elena Patsalidou

Global Finance Journal, 2022, vol. 52, issue C

Abstract: Do market participants believe that recent regulations will curb moral hazard at global systemically important banks (G-SIBs)? We analyze market returns to three events: the 2011 designation of certain banks as G-SIBs, the November 2014 identification of banks subject to additional capital surcharges, and the November 2015 announcement of Total Loss Absorption Capacity (TLAC) requirements. We find that reaction to the “designation event” fits the profit-based-reaction hypothesis, reaction to the “additional capital surcharges event” fits the regulatory burden hypothesis, and reaction to the “TLAC event” fits the irrelevance hypothesis. Weaker banks benefited more from being designated as G-SIBs, while EU banks suffered more from the additional capital surcharges.

Keywords: Global systemically important banks; Event study; Regulatory reforms; Moral hazard; Capital surcharges; Total loss absorbing capacity (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:52:y:2022:i:c:s1044028320302805

DOI: 10.1016/j.gfj.2020.100580

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