Do Banks Tend to Become “Too Big to Fail”? An Analysis of the “Too Big to Fail” Occurrence in the Banking Market

The “too big to fail” institutions are a widespread concern, especially in the financial world. The author aims to determine if banking markets have a tendency in creating “too big to fail” institutions or if they created randomly, by uncorrelated determinants. The importance of the study is fundamental in the current quest of the majority of governments of ending the conundrum of “too big to fail” financial institutions. Strict measures have been deployed and are under further discussion to be used in order to counter the potential negative effects of failure of “too big to fail” institutions. It seems though that little has been done to understand TBTF genesis. We believe that understating how “too big to fail” institutions come into existence could provide insights on how to deal with the negative externalities linked to their failure