Working Paper: NBER ID: w23167
Authors: Kyriakos T. Chousakos; Gary B. Gorton
Abstract: Economic growth is persistently low following a financial crisis, possibly because of a continuing weal banking system. In a financial crisis bank health is significantly damaged. Post-crisis regulatory changes have aimed at restoring bank health, but measuring bank health by Tobin's Q, we find that the ill health of banks in the recent U.S. financial crisis and the Euro crisis has persisted, especially compared to other crises in advanced economies. The low Q's cannot be explained by the state of the macro-economy. The results seem to suggest that bank regulatory changes may be repressive.
Keywords: bank health; financial crisis; Tobin's Q; regulatory changes; economic growth
JEL Codes: E32; E44; G01; G2; G21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| financial crises (G01) | bank health (G21) |
| bank health (G21) | economic growth (O49) |
| financial crises (G01) | Tobin's Q (G19) |
| regulatory changes (G18) | bank health (G21) |
| Tobin's Q (G19) | bank health (G21) |