Bank Size and Systemic Risk

Author/Editor:

Luc Laeven ; Lev Ratnovski ; Hui Tong

Publication Date:

May 8, 2014

Electronic Access:

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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.

Series:

Staff Discussion Notes No. 14/4

English

Publication Date:

May 8, 2014

ISBN/ISSN:

9781484363720/2221-030X

Stock No:

SDNEA2014004

Format:

Paper

Pages:

34

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