Analysis of the main factors in the resilience of the banking system: a multiple case study

Abstract

Crises are distressing and critical moments in all contexts, but when it comes to crises affecting the banking system, which is considered the engine of any country's economy, several risks, whether internal or external, can emerge and spread throughout the global banking system. The 2008 crisis is an emblematic example. After this financial distress, all decision-makers were convinced that resilience measures are an absolute priority to reduce fragility and strengthen the solidity of the system in order to face the most challenging scenarios. This study adopts a qualitative inductive approach, analyzing multiple case studies to investigate the factors influencing banking sector resilience. The study leverages data from stress tests conducted by regulatory bodies such as the Federal Reserve, the Bank of Canada, and Bank Al Maghrib. Despite improvements in capital ratios exceeding Basel III expectations, persistent weaknesses remain, particularly evident in the United States, where stress tests failed to prevent widespread bank failures. This study highlights the importance of regulatory measures, stress testing, and effective supervision in bolstering banking sector resilience against economic and financial shocks. By understanding the lessons gleaned from global case studies, policymakers and stakeholders can implement proactive measures to fortify the resilience of banking systems worldwide.