"Too big to fail" or "Too non-traditional to fail"?: The determinants of banks' systemic importance

Moore, Kyle and Zhou, Chen (2013): "Too big to fail" or "Too non-traditional to fail"?: The determinants of banks' systemic importance.

Abstract

This paper empirically analyzes the determinants of banks' systemic importance. In constructing a measure on the systemic importance of financial institutions we find that size is a leading determinant. This confirms the usual "Too big to fail'' argument. Nevertheless, banks with size above a sufficiently high level have equal systemic importance. In addition to size, we find that the extent to which banks engage in non-traditional banking activities is also positively related to banks' systemic importance. Therefore, in addition to ``Too big to fail", systemically important financial institutions can also be identified by a "Too non-traditional to fail" principle.

• Item Type: MPRA Paper
• Language: English
• Keywords: Too-big-to-fail, systemic importance, systemic risk, non-traditional banking, extreme value theory
• Subjects: G - Financial Economics > G0 - General > G01 - Financial Crises; G - Financial Economics > G2 - Financial Institutions and Services; G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation

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