The Systemic Importance of Banks – Name and Shame Seems to Work

Abstract

We test the impact of announcements of the list of global systemically important banks by the Financial Stability Board on the systemic importance of these banks. To this end we estimate the Systemic Importance Index introduced by Zhou (2010) for 110 banks, including global systemically important banks, over the period 1991-2014. For each bank we control for a number of variables, including size, quality of the bank balance sheet and business model that can affect systemic importance. We find that the announcement has decreased the systemic importance of these institutions by about 25%, a substantial and statistically significant amount.

Keywords: Systemic importance

JEL Classification: G14, G18, G21