January 2021: New VoxEU Column: The effects of ‘global systemically important bank’ designation on corporate lending

By Hans Degryse, Mike Mariathasan and Thi Hien Tang

Frequent bailouts during the Global Crisis showed that governments cannot credibly commit not to support large financial institutions. This inability leads to moral hazard and motivated the Financial Stability Board’s framework for ‘global systemically important banks’. This column explores the net effects of this framework on the real economy, focusing on changes in corporate lending and the availability of credit as the basis to evaluate whether the framework is an effective way in which to reduce moral hazard and promote robust financial markets.

The effects of ‘global systematically impoortant bank’ designation on corporate lending