The Impact of the Designation of Global Systemically Important Banks on Their Business Model

Aurélien Violon, Dominique Durant and Oana Toader ()
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Dominique Durant: Banque de France

International Journal of Central Banking, 2020, vol. 16, issue 5, 95-142

Abstract: To the best of our knowledge, this paper is among the first to provide empirical evidence on how the recent international regulation designed for global systemically important banks (G-SIBs) drove changes in these institutions' activity. Our econometric approach quantifies the impact of the designation of G-SIBs on their activity, controlling for both structural differences and industry trends. We find that G-SIBs have reduced the expansion of their balance sheet, which further improved their leverage ratio. A downward pressure is noticed on their return on equity, but no adverse consequences are observed on lending. We find no effect on G-SIBs' funding cost advantage, which suggests that "too-big-to-fail" distortions still persist.

JEL-codes: G01 G21 G28 G32 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (7)

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