Abstract

http://ssrn.com/abstract=1993059
 
 

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'Too Big to Fail' or 'Too Non-Traditional to Fail'?: The Determinants of Banks' Systemic Importance


Kyle Moore


Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Chen Zhou


Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

March 25, 2013


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.

Number of Pages in PDF File: 34

Keywords: too big to fail, too connected to fail, determinants of systemic importance, systemically important financial institution, systemic risk, systemic importance, multivariate extreme value theory

JEL Classification: G01, G21, G28

working papers series


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Date posted: January 29, 2012 ; Last revised: March 27, 2013

Suggested Citation

Moore, Kyle and Zhou, Chen, 'Too Big to Fail' or 'Too Non-Traditional to Fail'?: The Determinants of Banks' Systemic Importance (March 25, 2013). Available at SSRN: http://ssrn.com/abstract=1993059 or http://dx.doi.org/10.2139/ssrn.1993059

Contact Information

Kyle Moore (Contact Author)
Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )
P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands
Chen Zhou
Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )
P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands
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