Economics

The Bank Business Model in the Post-Covid-19 World

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The Covid-19 pandemic has induced a deep global economic crisis. Yet, in the middle of the financial turmoil over the past few months, banks were a source of resilience. Thanks to major reforms following the global financial crisis of 2007-2009, the much better capitalized and more liquid banks were not under immediate stress. In fact, banks are seen as useful to support the real sector's financing needs. But they will come under stress. Large-scale insolvencies among firms may arise. A wave of bankruptcies among households may follow. Banks could get caught up eventually, with stresses to exceed those envisioned in many tests. The effects from the crisis come on top of the combination over the past decade of persistently low interest rates, regulatory changes, and competition from shadow banks and new digital entrants that challenged the traditional bank business model pre-Covid-19. The report tackles these crucial challenges, examines the competitive responses of the different players --both incumbents and new entrants -- and the associated policy and regulatory issues.
Bibliographic citation: CARLETTI, E., CLAESSENS, S., FATÁS, A., VIVES, X. (2020). The Bank Business Model in the Post-Covid-19 World.
Date: 01/06/2020
Author(s): E. Carletti; Stijn Claessens; Antonio Fatás; Xavier Vives
Document type: Study and Monograph
Department: Economics
Sector:
Languages: English