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PEER ANALYSIS OF EUROPEAN LARGE BANKS KEY FINANCIAL RATIOS
Abstract
The paper fills the gap of the scarce economic literature devoted to the investigation of systemic banks prudential features. The statistical analysis gravitates around those banks designated by the Basel Committee of Banking Supervision as global systemically important banks (G-SIBs). It had been considered a comprehensive sample of 28 European systemic banks whose key financial indicators (capital adequacy, profitability, liquidity, and asset quality) became inputs for the peer analysis performed. The exploratory research consisted in performing a cluster analysis, to reveal if there is a pattern of similitude or, on the contrary, high heterogeneity between the different intrinsic financial characteristics of systemically important banks. The findings indicated a constant pattern of ressemblance between several G-SIBs, which persistently joined the same group for most years considered. From a temporal perspective, the year 2009 witnessed the highest dissimilarity and heterogeneity between European G-SIBs, a direct effect of the impact the financial turmoil had exerted on banks balance sheets. By performing an in-depth, individual analysis of the financial features at the core of banks grouping into homogenous clusters, a third conclusion arises. Several G-SIBs operating in Sweden, Norway, Denmark, Netherlands and Germany seem to be the best performers as they depict a sound and profitable business model, for 2016-year end data.
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References12
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