Wednesday, 11th of June 2025, 10.30 am – 12 pm
Lorenzo Burlon (ECB) will present the paper: “Determinants of banks performance: evidence from replicating portfolio”
Abstract: We construct a novel measure of bank performance, investigate its determinants, and show that it affects bank resilience, lending behaviour and real outcomes. Using confidential and granular data, we measure performance against a market-based benchmark portfolio that mimics individual banks’ interest rate and credit risk exposure. From 2015 to mid-2022, euro area banks underperformed market benchmarks by around 160 billion euros per year, amid substantial heterogeneity. Structural factors, such as cost inefficiencies, rather than monetary or regulatory measures, were the main driver of bank underperformance. We also show that higher edge banks are less reliant on government support measures and less likely to experience the materialisation of interest rate or credit risk when hit by shocks. Using the euro area credit register and the pandemic shock for identification, we find that higher edge banks originate more credit, direct it towards more productive firms, and support more firm investment.
Please note that this seminar will take place in a hybrid mode (the seminar will take place at the ACPR 4 Pl. de Budapest, 75009 Paris, and will also be streamed online).
(Free) registration (for both in person or online participation) is compulsory by mail at chaireACPR@acpr.banque-france.fr
If you opt for online participation, the connection details will be sent to you in the following days.
