Western Commercial G-SIBs and the TBTF Mentality: Has the Designation Policy Been Effective to Make Global Banks Safer?
79 Pages Posted: 8 May 2018 Last revised: 17 Sep 2020
Date Written: March 23, 2018
Abstract
This study used financial indicators and bankruptcy scores to analyse financial health of 14 publicly traded G-SIBs headquartered in Western countries. It also applied the event-study methodology to detect how market discipline could have been affected by the request for the bailout of Banca Monte dei Paschi di Siena (BMPS). The results of financial indicators and bankruptcy scores show little evidence to believe that banks have gotten significantly safer in the post-crisis period. The application of the event-study methodology insinuates that market discipline might have been eroded as evidence of abnormal returns for all G-SIBs was detected following the bailout request for BMPS.
Keywords: Systemic risk, Too-big-to-fail, event study, regulatory reforms, global systemically important banks, abnormal returns, financial distress
JEL Classification: G01; G14; G21; G28; G32; G33
Suggested Citation: Suggested Citation