European banks: Between a rock (need of more capital) and a hard place (low profitability)

Marco Onado, 23 February 2014



The financial crisis has put to the forefront the long-debated issue of banks’ capital adequacy, showing that banks were much more fragile than they (and their regulators) pretended, also because they were allowed to push their leverage to levels much higher than any industrial company, or even a hedge fund, has never dreamt of.

Topics: Global crisis
Tags: bank leverage, Europe, post-crisis equilibrium

Assessing leverage in the financial sector through flow data

Javier Villar Burke, 14 November 2013



The build-up of leverage in the banking sector played a prominent role in the Global Crisis.1 A standard description the role of leverage corresponds with the typical profile of a financial bubble as reflected in the evolution of the banks of the Eurostoxx 50 (Figure 1).

Topics: International finance
Tags: bank leverage, deleveraging, financial regulation, global crisis

What is the optimal leverage for a bank?

David Miles, 27 April 2011



At the height of the financial crisis, many highly leveraged banks found that their sources of funding disappeared – withdrawn due to fears over the scale of losses. In the fallout from this banking crisis, the economic damage has been enormous.

Topics: Financial markets, Global governance, Macroeconomic policy
Tags: bank leverage, financial regulation

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