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

See all articles by Rafael Salas-Pérez

Rafael Salas-Pérez

Universidad Tecnológica de Bolívar; University of Birmingham - Birmingham Business School

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

Salas-Pérez, Rafael and Salas-Pérez, Rafael, Western Commercial G-SIBs and the TBTF Mentality: Has the Designation Policy Been Effective to Make Global Banks Safer? (March 23, 2018). Available at SSRN: https://ssrn.com/abstract=3166961 or http://dx.doi.org/10.2139/ssrn.3166961

Rafael Salas-Pérez (Contact Author)

University of Birmingham - Birmingham Business School ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom
+57 3003023331 (Phone)

HOME PAGE: http://https://www.linkedin.com/in/rysalas-pro

Universidad Tecnológica de Bolívar ( email )

Manga Calle del Bouquet
Campus de Ternera, Parque Industrial y Tecnológico
Cartagena, Bolívar
Colombia
+57 3003023331 (Phone)

HOME PAGE: http://https://www.linkedin.com/in/rysalas-pro

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