European banks after the global financial crisis: peak accumulated losses, twin crises and business models

Haan, Leo de; Kakes, Jan

doi:10.1057/s41261-019-00107-y

Cited by 11 publications

(4 citation statements)

References 21 publications

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“…This relationship unveils stronger bail-in expectations by investors in smaller banks. This result is supported by the recent cases of misuse of the bail-in tool in Poland and India and further points out the necessity of reviewing bail-in rules for middle and small banks (de Haan and Kakes, 2020).…”

Section: Robustness Testsmentioning

confidence: 53%

Bail-in credibility: evidence from emerging markets

Velliscig

Piserà²,

Polato³

et al. 2022

IJOEM

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PurposeSome controversial cases of bail-in in the emerging countries have raised the question about whether for those countries to have in place a regulation for the bail-in is appropriate or not. To assess appropriateness, this paper investigates bail-in credibility among investors, as crucial condition for the credibility’s smooth implementation, by measuring the yield spread between bailinable and non-bailinable bonds.Design/methodology/approachThe authors compare the yield spread of banks located in emerging countries that have in place a framework for the bail-in to the comparable yield spread measured for banks located in emerging countries without such framework. The comparison permits to detect whether there is a significant difference between the two spreads, which would suggest that bail-in regulation has been deemed credible by market participants where enforced, or not, which in this case would signal a problem of credibility.FindingsThe authors' results point out a significantly higher yield spread for banks located in emerging countries that have adopted a framework for the bail-in of creditors. Bail-in regulation has, therefore, being deemed credible in the adopting emerging countries, thus ensuring a crucial condition for bail-in regulation's smooth application. The authors also point out bank size and country's gross domestic product (GDP) growth as crucial moderators of bail-in expectations of market participants that can guide the implementation of bail-in rules in emerging countries.Originality/valueThis paper contributes to the literature on the credibility of bail-in with a new perspective from the emerging countries.

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Section: Robustness Testsmentioning

confidence: 53%

Bail-in credibility: evidence from emerging markets

Velliscig

Piserà²,

Polato³

et al. 2022

IJOEM

View full text Add to dashboard Cite

show abstract

“…The second method is to apply dimensionality reduction techniques to account for the multivariate and simultaneous nature of business model choices (de Haan and Kakes, 2019;Mergaerts and Vander Vennet, 2016;van Ewijk and Arnold, 2014). After applying hierarchical clustering and finding clusters with low quality (silhouette width of 0.2 for a partition in three clusters), Mergaerts and Vander Vennet (2016) applied factor analysis on seven business model variables and retained two factors: retail-orientation and diversification.…”

Section: Literature Review On Methods Used To Identify Banking Business Modelsmentioning

confidence: 99%

Using clustering ensemble to identify banking business models

Marques

Alves

2020

Intell Sys Acc Fin Mgmt

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Summary The business models of banks are often seen as the result of a variety of simultaneously determined managerial choices, such as those regarding the types of activities, funding sources, level of diversification, and size. Moreover, owing to the fuzziness of data and the possibility that some banks may combine features of different business models, the use of hard clustering methods has often led to poorly identified business models. In this paper we propose a framework to deal with these challenges based on an ensemble of three unsupervised clustering methods to identify banking business models: fuzzy c‐means (which allows us to handle fuzzy clustering), self‐organizing maps (which yield intuitive visual representations of the clusters), and partitioning around medoids (which circumvents the presence of data outliers). We set up our analysis in the context of the European banking sector, which has seen its regulators increasingly focused on examining the business models of supervised entities in the aftermath of the twin financial crises. In our empirical application, we find evidence of four distinct banking business models and further distinguish between banks with a clearly defined business model (core banks) and others (non‐core banks), as well as banks with a stable business model over time (persistent banks) and others (non‐persistent banks). Our proposed framework performs well under several robustness checks related with the sample, clustering methods, and variables used.

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“…De Haan and Kakes (2018) identify two business models using factor analysis and 15 bank characteristics as an input set, namely Big investment banks and Retail banks . The sample includes 69 EU banks with at least EUR 30 bn total assets.…”

Section: Literature Reviewmentioning

confidence: 99%

Does a bank's business model affect its capital and profitability?

Farné

Vouldis

2020

Economic Notes

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We use a data-driven classification of systemically important European banks into business models based on confidential granular supervisory data and investigate whether banks following different models differ with respect to their capitalisation and profitability. Our aim is to locate the banks' business model in a risk-return space. Using an instrumental variables approach, our econometric methodology addresses potential endogeneity issues. Overall, we find that wholesale funded and securities holding banks are positioned on a relatively high risk-return trade-off plane compared with commercial banks. On the other hand, traditional commercial banks earn lower returns with moderate risk.

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European banks after the global financial crisis: peak accumulated losses, twin crises and business models

Cited by 11 publications

References 21 publications

Bail-in credibility: evidence from emerging markets

Bail-in credibility: evidence from emerging markets

Using clustering ensemble to identify banking business models

Does a bank's business model affect its capital and profitability?

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