The Systemic Importance of Financial Institutions

13 Pages Posted: 1 Aug 2012

See all articles by Nikola A. Tarashev

Nikola A. Tarashev

Bank for International Settlements (BIS) - Monetary and Economic Department

Claudio E. V. Borio

Bank for International Settlements (BIS) - Research and Policy Analysis

Kostas Tsatsaronis

Bank for International Settlements (BIS) - Monetary and Economic Department

Date Written: September 2009

Abstract

Prudential tools that target financial stability need to be calibrated at the level of the financial system but implemented at the level of each regulated institution. They require a methodology for the allocation of system-wide risk to the individual institution in line with its systemic importance. This article proposes a general and flexible allocation methodology and uses it to identify and quantify the drivers of systemic importance. It then illustrates how the methodology could be employed in practice, based on a sample of large internationally active institutions.

JEL Classification: C15, C71, G20, G28

Suggested Citation

Tarashev, Nikola A. and Borio, Claudio E.V. and Tsatsaronis, Konstantinos, The Systemic Importance of Financial Institutions (September 2009). BIS Quarterly Review, September 2009. Available at SSRN: https://ssrn.com/abstract=1473007

Nikola A. Tarashev (Contact Author)

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Claudio E.V. Borio

Bank for International Settlements (BIS) - Research and Policy Analysis ( email )

CH-4002 Basel, Basel-Stadt
Switzerland

Konstantinos Tsatsaronis

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland
(41 61) 280 8082 (Phone)
(41 61) 280 9100 (Fax)

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