Bank Health Post-Crisis

Abstract

Economic growth is persistently low following a financial crisis, possibly because of a continuing weak banking system. In a financial crisis bank health is significantly damaged. Post-crisis regulatory changes have aimed at restoring bank health, but measuring bank health by Tobin's Q, we find that the ill health of banks in the recent U.S. financial crisis and the Euro crisis has persisted, especially compared to other crises in advanced economies. The low bank Q's cannot be explained by the state of the macro-economy. The results seem to suggest that bank regulatory changes have been repressive.

Keywords: Bank health, financial crisis

JEL Classification: E58, G01, G21