IDEAS home Printed from https://ideas.repec.org/a/iif/iifjrn/v29y2014i338p67-90.html
   My bibliography  Save this article

Does Size of Banks Really Matter? Evidence from Credit Default Swaps Market Data

Author

Listed:
  • İlker ARSLAN

    (İzmir Ekonomi Üniversitesi)

  • Ayla Oğuş BİNATLI

    (İzmir Ekonomi Üniversitesi)

Abstract

This study aims to discover whether markets take into account the phenomenon known as Too Big to Fail. Using Credit Default Swaps market data, which reflects the risk, markets attribute to banks, we calculate the default probabilities of banks over one, two, and three year periods. These results are then regressed with financial values such as total assets, total shareholders’ equity and net income. Subsequently, the study is extended and the regression analysis repeated using Return on Assets as dependent variable. We find that markets place emphasis on profitability rather than size when pricing the riskiness of a bank. We conclude that the well-known concept of ‘Too Big to Fail’ cannot be considered as a concept with much validity, but the phrase ‘Too Profitable to Fail’ may provide a more accurate assessment of the situation.

Suggested Citation

  • İlker ARSLAN & Ayla Oğuş BİNATLI, 2014. "Does Size of Banks Really Matter? Evidence from Credit Default Swaps Market Data," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 29(338), pages 67-90.
    • Handle: RePEc:iif:iifjrn:v:29:y:2014:i:338:p:67-90
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Keywords

    Banking; Too Big to Fail; Credit Default Swaps;
    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iif:iifjrn:v:29:y:2014:i:338:p:67-90. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ali Bilge (email available below). General contact details of provider: http://iif.com.tr .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.