Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/112762
Authors: 
Frey, Rainer
Year of Publication: 
2015
Series/Report no.: 
Discussion Paper, Deutsche Bundesbank 18/2015
Abstract: 
After the collapse of Lehman Brothers, a rapid and far-reaching shrinkage of international banks' assets with a focus on foreign claims took place. For the largest 67 German banking groups, we find that both their characteristics and behavior in the pre-crisis episode had repercussions for the crisis period. Above all, prior non-traditional banking activities - proxied by the relevance of securities and noninterest income - resulted in balance sheet contraction in the crisis. While, from 2002 to mid-2008, a disproportionately high growth rate in profits to assets is found to be indicative of too much risk taking, both high average income and a strong balance sheet expansion in the pre-crisis period are found to be positive per se. In contrast, a high average income or a strong growth in assets in just the last three and a half years before the outbreak of the crisis put balance sheets during the crisis under adjustment pressure. During the crisis, short-term wholesale funding proved to be a disadvantage, while good capital endowment (core Tier 1 capital to RWA ratio), deposit funding and strong affiliate presence abroad had a stabilizing impact. Most of these variables lose their significance in normal times.
Subjects: 
banks
deleveraging
foreign assets
financial crisis
pre crisis
JEL: 
G21
F23
F34
ISBN: 
978-3-95729-162-2
Document Type: 
Working Paper

Files in This Item:
File
Size
698.18 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.