The value of being systemically important financial institution

We investigate whether financial markets reacted to the regulatory change implied by the publication of the SIFIs list and the new rules designed to address the too-big-to fail problem of systemic banks. Using event study methodology applied to a sample of 70 of the world’s largest banks, we assess whether following the methodology used to identify SIFIs and their new capital requirements and the disclosure of the former list of 29 SIFIs stock prices of SIFIs reacted significantly and differently from those of other large banks, not deemed to be systemically important. Overall, we find that financial markets did not strongly react to the new regulation regarding SIFIs.