Thesis_gd_final_vers.. - Vernimmen

Student: Guillaume Despagne
The determinants of US regional banks failures during the subprime crisis
Abstract: The aim of this thesis is to determine and analyze the causes of US regional bank failures
during the subprime crisis. In order to get a better understanding of the crisis and its impact on US
banks, we first present the evolutions that have radically changed the US banking landscape over
the past few decades and lead to the worst banking and economic crisis since the Great
Depression. We then perform a mean difference analysis to compare the characteristics of failed
banks and safe banks, which did not fail. We find significant differences on most of our variables
and can clearly identify a profile of failed banks. We build a dynamic logistic model to assess the
determinants of bank failures during the crisis. Despite the rise of new financial technologies and
of a universal banking business model strongly connected to financial markets, which mostly
impacted the largest banks, our findings show that failed small banks have been the victims of a
credit bubble linked to real estate.
- 2 -