EU bank deleveraging
Pierluigi Bologna (),
Marianna Caccavaio () and
Arianna Miglietta ()
Additional contact information
Marianna Caccavaio: Banca d'Italia
No 235, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area
We analyse the deleveraging process with reference to a sample of European banks from December 2011 to June 2013 and find that the leverage ratio (measured as assets to equity) has declined on average from 28.6 to 25.0. Its standard deviation fell from 8.2 to 6.5. About 2/3 of the deleveraging has been achieved by raising common equity while 1/3 took place by reducing balance sheet assets. The deleveraging has been more ï¿½goodï¿½ (raising capital and reducing non-core assets) than ï¿½uglyï¿½ (indiscriminate asset sales) even though only a few banks in our sample managed to pursue it also through a reduction in bad assets. Based on the US experience, we argue that European banks have not yet completed their deleveraging, although what has been done to date is more substantive that it appears prima facie given the generalized increase in banksï¿½ sovereign exposure.
Keywords: leverage; deleveraging; European banks; financial stability (search for similar items in EconPapers)
JEL-codes: G21 G01 G28 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban and nep-eec
References: Add references at CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bdi:opques:qef_235_14
Access Statistics for this paper
More papers in Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area Contact information at EDIRC.
Bibliographic data for series maintained by ().