NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) releases this month’s edition of Bank Talk: The After-Show.
In Big Banks Cannot Fail, Ethan and Van discuss metrics which measure the extent to which creditors price in the probability that bank regulators would seize a failing large bank, as well as how much losses they would suffer versus pre-bank regulatory reforms.
Suggesting that too big to fail (TBTF) is still operative or has never played a measurable role in funding costs, Ethan points to bank data going back to 2003 that indicates large banks have almost always paid a lower rate on uninsured deposits compared to smaller banks and bank holding company debt.
Regardless of TBTF’s status today, the evidence suggests that depositors and fixed income investors still value doing business with larger institutions over smaller ones, even at the expense of a higher rate on their uninsured deposits and bond investments.
To view the report, click here.
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KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.