"Too big to fail" or "Too non-traditional to fail"?: The determinants of banks' systemic importance

Kyle Moore and Chen Zhou ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper empirically analyzes the determinants of banks' systemic importance. In constructing a measure on the systemic importance of financial institutions we find that size is a leading determinant. This confirms the usual "Too big to fail'' argument. Nevertheless, banks with size above a sufficiently high level have equal systemic importance. In addition to size, we find that the extent to which banks engage in non-traditional banking activities is also positively related to banks' 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 importance; systemic risk; non-traditional banking; extreme value theory (search for similar items in EconPapers)
JEL-codes: G01 G2 G28 (search for similar items in EconPapers)
Date: 2013-02-23
New Economics Papers: this item is included in nep-ban, nep-cba and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:45589

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