Download This PaperGlobal Versus Non-Global Banks: A Capital Ratios-Based Analysis
Journal of Central Banking Theory and Practice, 2021, Vol.10 (2), pp.5-22. DOI: 10.2478/jcbtp-2021-0011
18 Pages Posted: 1 Jun 2021
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Global Versus Non-Global Banks: A Capital Ratios-Based Analysis
Date Written: May 17, 2021
Abstract
This paper examines the Leverage Ratio and Total Capital Ratio of global versus non-global banks in both the pre- and postcrisis periods. A panel data set of 165 global and non-global financial institutions from 38 countries is used for the period 1999-2015 and a random effects model is employed to examine whether global banks perform better or not compared to their non-global counterparts.This study comes up with two important findings. First, global banks do not exhibit heterogeneous behaviour with respect to both ratios neither in the pre- and especially nor in the post-crisis period. Second, the Leverage Ratio is crisis-insensitive, but the Total Capital Ratio is
not. Our findings encourage further research on the topic of the contribution of global banks to the financial crisis propagation (at least as far as leverage is concerned).
Keywords: CAMELS factors, financial crisis, Global banks, Leverage Ratio, Non-global banks, Total Capital Ratio
JEL Classification: C33, G01, G21, G24, G29
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