Office Of Financial Research Update: "Size Alone is Not Sufficient To Identify Systemically Important Banks."

How can regulators determine which banks to hold to tougher standards to reduce risks to the financial system? U.S. bank regulators often use asset-size thresholds, assuming that larger banks pose more risks than smaller banks. Today, the U.S. Office of Financial Research issued an OFR Viewpoint paper, titled, "Size Alone is Not Sufficient to Identify Systemically Important Banks." This OFR viewpoint argues that a multifactor approach is superior to considering size alone in determining systemic importance.

The OFR also issued an accompanying blog by Director Richard Berner, titled, “Bank Size Does Not Tell the Whole Story in Measuring Systemic Importance.”

The blog can be found here.

The Viewpoint can be found here.

The OFR home page is at: https://www.financialresearch.gov/.