October 2020 issue contents
The Impact of the Designation of Global Systemically Important Banks on Their Business Model

Aurélien Violon,a Dominique Durant,b and Oana Toaderc


To the best of our knowledge, this paper is among the first to provide empirical evidence on how the recent international regulation designed for global systemically important banks (G-SIBs) drove changes in these institutions' activity. Our econometric approach quantifies the impact of the designation of G-SIBs on their activity, controlling for both structural differences and industry trends.We find that G-SIBs have reduced the expansion of their balance sheet, which further improved their leverage ratio. A downward pressure is noticed on their return on equity, but no adverse consequences are observed on lending. We find no effect on G-SIBs' funding cost advantage, which suggests that "too-big-to-fail" distortions still persist.

JEL Codes: G01, G21, G28, G32.

Full article (PDF, 48 pages, 2,965 kb)

Banque de France - ACPR and Paris School of Economics, Université Paris 1 Panthéon Sorbonne
Banque de France
Banque de France - ACPR