Summary of What happened to global banking after the crisis?

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In the years following the 2008 financial crisis, pundits and policy analysts decried the implosion of the global banking sector. But a fresh look at the international footprint of the largest global systemically important banks (G-SIBs) reveals a more nuanced picture of the current banking architecture. Professor Dirk Schoenmaker dissects the latest data and provides analysis on the influence, scale, scope and state of the G-SIBs from a global perspective. getAbstract recommends this detailed and expert report to banking professionals and those interested in assessing the condition of global financial institutions.

In this summary, you will learn

  • How the global systemically important banks (G-SIBs) have changed from 2007 to 2015,
  • What strengths and weaknesses G-SIBs show in the major economic geographies, and
  • Why global banking has declined.
 

About the Author

Dirk Schoenmaker is a senior fellow at Bruegel.

 

Summary

In the aftermath of the global financial crisis, banking regulators have established new frameworks to safeguard the international financial system. These changes have affected the asset size, capitalization levels and “global reach” of the global systemically important banks (G-SIBs). According to 2015 statistics, 30 G-SIBs spread across five geographic centers – China, the euro zone, Japan, the United States and the United Kingdom – held half of all global banking assets, $48 trillion of a total $96 trillion. Looking at a slightly larger dataset that adds two G-SIBs in Switzerland and one in Sweden, total asset levels increased 5% over the 2007–2015 period. Overall capitalization for the group rose from 3.1% in 2007 to 5.9% in 2015. G-SIBs have migrated from regional and global lending toward more home country activity: The proportion of their banks’ assets in foreign markets dropped from 44% in 2007 to 35% in 2015.

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    Ashish Agarwal 2 weeks ago
    In my opinion, by not discussing the profitability of the banks from their consolidation activities in response to the Great Recession of 2008, the study paints an incomplete picture of the banks' current financial state and lends itself insufficient in giving it's readers the ability to project future outlook for the global financial activities.

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