A look on the global financial crisis beyond banks’ balance sheets

Papanikolaou, Nikolaos and Wolff, Christian (2015) A look on the global financial crisis beyond banks’ balance sheets. VOX: CEPR's Policy Portal.

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Abstract

In the years running up to the global crisis, the banking sector was marked by a high degree of leverage. Using US data, this column shows how, before the onset of the crisis, banks accumulated leverage both on and, especially, off their balance sheets. The latter activities saw an increase in maturity mismatch, raised the probability of bank runs, and increased both individual bank risk and systemic risk. These findings support the imposition of an explicit off-balance sheet leverage ratio in future regulatory frameworks.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Business and Management
Subjects: H Social Sciences > HG Finance > HG1501 Banking
H Social Sciences > HG Finance > HG1501 Banking > HG1706 Accounting. Bookkeeping
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Depositing User: Nikolaos Papanikolaou
Date Deposited: 21 Nov 2016 11:12
Last Modified: 22 Mar 2017 19:26
URI: http://sro.sussex.ac.uk/id/eprint/65547

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