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O-SII designation and deposit funding costs

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  • Vogel, Ursula

Abstract

This paper investigates implications of the designation of national systemically important banks (Other Systemically Important Institutions — O-SIIs) in Germany. It looks whether being labelled as ‘systemically important financial institution’ affects banks’ deposit funding costs. Results show that being designated as O-SII brings a funding cost advantage of about 30bps for deposits in the aftermath of the announcement. The finding points toward some unintended consequence of measures implemented to address ‘too-big-to-fail’ related issues.

Suggested Citation

  • Vogel, Ursula, 2020. "O-SII designation and deposit funding costs," Economics Letters, Elsevier, vol. 192(C).
    • Handle: RePEc:eee:ecolet:v:192:y:2020:i:c:s0165176520301786
    DOI: 10.1016/j.econlet.2020.109261
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    References listed on IDEAS

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    1. Andrieș, Alin Marius & Nistor, Simona & Ongena, Steven & Sprincean, Nicu, 2020. "On Becoming an O-SII (“Other Systemically Important Institution”)," Journal of Banking & Finance, Elsevier, vol. 111(C).
    2. Veronica Grembi & Tommaso Nannicini & Ugo Troiano, 2016. "Do Fiscal Rules Matter?," American Economic Journal: Applied Economics, American Economic Association, vol. 8(3), pages 1-30, July.
    3. Moenninghoff, Sebastian C. & Ongena, Steven & Wieandt, Axel, 2015. "The perennial challenge to counter Too-Big-to-Fail in banking: Empirical evidence from the new international regulation dealing with Global Systemically Important Banks," Journal of Banking & Finance, Elsevier, vol. 61(C), pages 221-236.
    4. Stefan Jacewitz & Jonathan Pogach, 2018. "Deposit Rate Advantages at the Largest Banks," Journal of Financial Services Research, Springer;Western Finance Association, vol. 53(1), pages 1-35, February.
    5. Jacob Kleinow & Tobias Nell & Silvia Rogler & Andreas Horsch, 2014. "The value of being systemically important: event study on regulatory announcements for banks," Applied Financial Economics, Taylor & Francis Journals, vol. 24(24), pages 1585-1604, December.
    6. Balasubramnian, Bhanu & Cyree, Ken B., 2014. "Has market discipline on banks improved after the Dodd–Frank Act?," Journal of Banking & Finance, Elsevier, vol. 41(C), pages 155-166.
    7. Alexander Schäfer & Isabel Schnabel & Beatrice Weder di Mauro, 2016. "Financial Sector Reform after the Subprime Crisis: Has Anything Happened?," Review of Finance, European Finance Association, vol. 20(1), pages 77-125.
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    Cited by:

    1. Carmen Broto & Luis Fernández Lafuerza & Mariya Melnychuk, 2022. "Do buffer requirements for european systemically important banks make them less systemic?," Working Papers 2243, Banco de España.
    2. Grodzicki, Maciej & Jarmuzek, Mariusz, 2021. "The impact of regulatory reforms for systemically important institutions, defined as “other” (O-SII)," Journal of Policy Modeling, Elsevier, vol. 43(6), pages 1344-1353.

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    More about this item

    Keywords

    Bank regulation; Too-big-to-fail; Deposit funding costs;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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