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What Happened to Global Banking after the Crisis?

Schoenmaker, Dirk, What Happened to Global Banking after the Crisis? (March 9, 2017). Available at SSRN:
“The global financial crisis led to an alleged end of global banking. However, we find that reports on the end of global banking are premature. Investigating the global systemically important banks, we identify a strong composition effect: a shift of business from the global European banks to the more domestic Asian banks, which are gradually increasing their global reach. The US banks keep their strong position. So, the decline in cross-border banking is largely due to a composition effect (i.e. a reshuffle within the global banking champions league) and far less to a reduced global reach of individual banks. On the reform agenda, we see a substantial increase in capital levels, though the distribution is uneven. China and the US are leading the pact with leverage ratios (Tier 1 capital divided by total assets) of around 7 percent for their large banks, while Europe and Japan are trailing behind with ratios between 4 and 5 percent. We suggest that the latter regions bring their capital levels in line with international practice.”

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