The $100 billion question - Signal Lake Venture Fund

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Chart 2: Concentration of the US banking system (b) Total assets of top 3 US banks (as % of total commercial banking sector assets) 45.00 40.00 35.00 30.00 25.00 20.00 15.00 10.00 5.00 0.00 1935 1939 1943 1947 1951 1955 1959 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 (a) Red line represents the Gramm-Leach-Bliley Act (1999) which revoked restrictions of Glass-Steagall (b) Top 3 banks by total assets as a % of total banking sector assets (c) Data includes only the insured depository subsidiaries of banks to ensure consistency over time - for example, non-deposit subsidiaries are not included. Source: FDIC Chart 3: Largest UK company’s assets in each sector relative to GDP Per cent 160 2007 2000 140 120 100 80 60 40 20 0 Banking Insurance Oil/Energy Telecomms. Mining Utilities Pharm. Retail Technology Media Source: Bureau van Dijk Electronic Publishing, International Monetary <strong>Fund</strong> and Bank calculations. 26
Chart 4: Bank size and volatility Chart 5: Bank diversification and volatility Income volatility 3.0% Income volatility 3.0% 2.5% 2.5% R 2 = 0.013 2.0% 1.5% R 2 = 0.0857 2.0% 1.5% 1.0% 1.0% 0.5% 0.5% 0.0% 0 1,000 2,000 3,000 4,000 Average assets ($m) 0.0% 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 Diversification Notes: Average assets are calculated for 24 banks between 2006 and 2008. Income volatility is measured as the standard deviation of operating income (per asset) over the period 1997-2008. Source: Bankscope, published accounts and Bank calculations. Notes: Pre-crisis diversification and income volatility for a sample of 25 banks. Diversification index based on revenue concentration, as described in the main text. Source: Bankscope, published accounts and Bank calculations. Chart 6: Bank size and write downs Chart 7: Bank diversification and write downs Write downs per asset 7% 6% Write downs per asset 7% 6% 5% 5% R 2 = 0.0009 4% R 2 = 0.0919 4% 3% 3% 2% 2% 1% 1% - 1,000 2,000 3,000 Total Assets ($bn) 0% 0% 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 Diversification Notes: Total assets for a sample of 21 banks for 2007. Cumulative write downs over the course of the crisis are shown (from 2007 Q4 to 2009 Q3). Source: Bankscope, published accounts and Bank calculations. Notes: Sample of 21 banks. Cumulative write downs over the course of the crisis are shown (from 2007 Q4 to 2009 Q3). Source: Bankscope, published accounts and Bank calculations. 27
Page 1 and 2: THE $100 BILLION QUESTION Andrew G
Page 3 and 4: There is a large literature measuri
Page 5 and 6: Second, this ratings difference has
Page 7 and 8: In making these choices, economists
Page 9 and 10: Against this economic backdrop, and
Page 11 and 12: 1960s, computers were highly integr
Page 13 and 14: the relationship is positively slop
Page 15 and 16: exogenous, even these events have b
Page 17 and 18: Experience in the US following the
Page 19 and 20: contracts - the financial equivalen
Page 21 and 22: References Aikman, D, Barrett, P, K
Page 23 and 24: Santomero, A M and D L Eckles (2000
Page 25: Table 4: Estimated subsidy for UK b

The $100 billion question - Signal Lake Venture Fund

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