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The determinants of systemic importance

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  • Moore, Kyle
  • Zhou, Chen

Abstract

This paper empirically analyses the determinants of banks’ systemic importance. With applying a novel measure on the systemic importance to US bank holding companies in 2000–2010, we show that size is an important determinant of systemic importance, but banks with size above a certain threshold have equal systemic importance. On top of size, engaging heavily in non-traditional banking activities, such as relying on money market fund and generating non-interest income, is also related to high 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.

Suggested Citation

  • Moore, Kyle & Zhou, Chen, 2014. "The determinants of systemic importance," LSE Research Online Documents on Economics 59289, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:59289
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    File URL: http://eprints.lse.ac.uk/59289/
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    References listed on IDEAS

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    3. Mihir Dash, 2021. "Non-Performing Loans and Systemic Risk of Indian Banks," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 10(1), pages 10-20, April.

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    More about this item

    Keywords

    too-big-to-fail; systemic risk; extreme value theory;
    All these keywords.

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • 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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