To be or not to be a G-SIB: Does it matter?

Mardi | 2016-04-05
17h00-18h10 Sully05

Sebastian SCHICH – Oana TOADER

Recent regulatory reform efforts are squarely focusing on eliminating the notion that large and potentially systemic banks are “special”, and ensuring effective resolution of G-SIBs is a key element of the FSB agenda to end “too-big-to-fail”. The paper assesses progress in this regard, using as a measure estimates of the value of implicit guarantees for a sample of 27 G-SIBs and 177 other large banks from 23 countries from 2007 to 2015. It finds that G-SIBs benefit from a significantly higher value of implicit guarantee than other banks, controlling for intrinsic strength and the identity of the supposed “guarantor”, i.e. the sovereign. It also confirms earlier results that weaker banks and those with a stronger sovereign benefit from higher values of implicit guarantees. It fails however to find evidence that inclusion of a bank in the FSB’s G-SIB list (the “treatment”) reduces the value of the implicit guarantee.