| By: |
Renata Karkowska (University of Warsaw, Faculty of Management) |
| Abstract: |
The aim of this article is to identify systemically important banks on a
European scale, in accordance with the criteria proposed by the supervisory
authorities. In this study we discuss the analytical framework for identifying
and benchmarking systemically important financial institutions. An attempt to
define systemically important institutions is specified their characteristics
under the existing and proposed regulations. In a selected group of the
largest banks in Europe the following indicators ie.: leverage, liquidity,
capital ratio, asset quality and profitability are analyzed as a source of
systemic risk. These figures will be confronted with the average value
obtained in the whole group of commercial banks in Europe. It should help
finding the answer to the question, whether the size of the institution
generates higher systemic risk? The survey will be conducted on the basis of
the financial statements of commercial banks in 2007 and 2010 with the
available statistical tools, which should reveal the variability of risk
indicators over time. We find that the largest European banks were
characterized by relative safety and without excessive risk in their
activities. Therefore, a fundamental feature of increased regulatory limiting
systemic risk should understand the nature and sources of instability, and
mobilizing financial institutions (large and small) to change their risk
profile and business models in a way that reduces the instability of the
financial system globally.Length: 32 pages |
| Keywords: |
banking, Systematically Important Financial Institutions, SIFI, systemic risk, liquidity, leverage, profitability |
| JEL: |
C1 F36 G21 G32 G33 |
| Date: |
2014–09 |
| URL: |
http://d.repec.org/n?u=RePEc:sgm:fmuwwp:42014&r=cfn |