Staff Discussion Notes

Bank Size and Systemic Risk

By Luc Laeven, Lev Ratnovski, Hui Tong

May 8, 2014

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Luc Laeven, Lev Ratnovski, and Hui Tong. Bank Size and Systemic Risk, (USA: International Monetary Fund, 2014) accessed December 4, 2024

Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary

The proposed SDN documents the evolution of bank size and activities over the past 20 years. It discusses whether this evolution can be explained by economies of scale or “too big to fail” subsidies. The paper then presents evidence on the extent to which bank size and market-based activities contribute to systemic risk. The paper concludes with policy messages in the area of capital regulation and activity restrictions to reduce the systemic risk posed by large banks. The analysis of the paper complements earlier Fund work, including SDN 13/04 and the recent GFSR chapter on “too big to fail” subsidies, and its policy message is in line with this earlier work.

Subject: Banking, Commercial banks, Financial crises, Financial institutions, Financial sector policy and analysis, National accounts, Personal income, Stocks, Systemic risk

Keywords: Bank activity, Bank characteristic, Bank risk, Bank size, Commercial banks, Europe, Financial Regulation, Financial Structure, Global, Large bank, Personal income, SDN, Stocks, Systemic risk

Publication Details

  • Pages:

    34

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

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  • Series:

    Staff Discussion Notes No. 2014/004

  • Stock No:

    SDNEA2014004

  • ISBN:

    9781484363720

  • ISSN:

    2617-6750