Introduction

Abstract

This book reviews the reasons and the process, describes the datasets for Europe, US and Canada, and details the methodology, computations and analysis used to develop the bank business models (BBM) analysis framework. It explains the relevance of this new framework for financial stability assessment and for the future of banking regulation and resolution.

First, it provides an overview on the evolving role of banks in the financial system—with a focus on why banks changed their business models over the past decades and how the economics and the policy literatures explained it. Second, it proposes a definition after reviewing the literature on business models and banking and describes the datasets collected and the methodology used to identify business models in banks. Third, it explains how the business models analysis can be a tool for financial stability assessment and therefore can serve as a pillar for the future of regulation and resolution. Fourth, it provides the BBM assessment framework, including links between business models with ownership and organisational structures and size, the migration of business models, the assessment of performance and risks, and how different business models respond to the exiting one-size-fits-all regulation and resolution using comprehensive datasets of banks in Europe, US and Canada prior and after the Great Financial Crisis (GFC).