European Banks after the Global Financial Crisis: Peak Accumulated Losses, Twin Crises and Business Models
32 Pages Posted: 30 Jul 2018
Date Written: July 3, 2018
This paper takes stock of European banks’ accumulated losses since 2007 and relates these to bank characteristics. In line with previous studies, we find that large, market-oriented banks were particularly hit by the 2007-2009 global financial crisis whereas smaller, retail-oriented banks weathered these years relatively well. In subsequent years, however, the picture reversed and retail-oriented banks were most affected. Over the entire period, medium-sized banks suffered most losses and often needed state aid. This suggests that measures to contain systemic risk, such as capital surcharges and bail-in requirements, are as relevant for these institutions as they are for the largest banks.
Keywords: Bank profitability, Business model, Financial crisis
JEL Classification: G01, G21
Suggested Citation: Suggested Citation