Sunday, 3 November 2013

Top EU Versus US Banks and Which System is More Vulnerable.

Which system of banks is more robust, that of the US or the European one? A recent analysis performed by ASSETDYNE using stock market data reveals that the US market is far less vulnerable in case of contagion. Here are the results.

Top US Banks.

A 4-star rating (84%) points to a resilient situation.

Top EU Banks.

Again, a 4-star rating (85%) reveals high resilience. So why is the US system potentially less vulnerable? Look at the map densities. The US Complexity Map has a density of 32%, that of the EU banks 76%, far more than double. This means in case of financial contagion, the EU system of banks is far more vulnerable that the American one. This is also evident if one examines the size of the nodes in each map. In the case of the US, there are 3, 4 dominant nodes (hubs) while in the EU almost all banks have equal footprint. Of course, we're not talking of revenue - by footprint we mean the impact of each bank on the overall resilience of the system. The above results also means that the EU system is far more difficult to reform than the US banking system. It is alo much more complex (39.37 versus 25.28)  Providing one wants to reform it. And financial lobbies allowing it.