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Systemic and Failure Risk Effects of the U.S. Regional Bank Crisis

James W. Kolari et al.

Applied Finance Letters2025https://doi.org/10.24135/afl.v14i.1007article
ABDC B
Weight
0.50

Abstract

This study investigates the effects of recent large U.S. regional bank failures on industrywide systemic risk as well as individual bank failure risk. We begin by using a logit model of individual bank failure risks to construct aggregate measures of systemic risk over time. Subsequently, mimicking bank supervisory practice, predicted systemic risks are estimated by mean reversion models. Lastly, using these estimates, we forecast the failure risk of individual banks. We find that, in response to increasing systemic risks, all bank experienced higher predicted failure risk. While regional banks were more affected than national banks, community banks were particularly sensitive to rising systemic risks. Future research on regulatory efforts to control systemic risk is recommended.

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https://doi.org/https://doi.org/10.24135/afl.v14i.1007

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@article{james2025,
  title        = {{Systemic and Failure Risk Effects of the U.S. Regional Bank Crisis}},
  author       = {James W. Kolari et al.},
  journal      = {Applied Finance Letters},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.24135/afl.v14i.1007},
}

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Systemic and Failure Risk Effects of the U.S. Regional Bank Crisis

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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