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Archive » March 2024 » A financial soundness index for European banks

A financial soundness index for European banks

Vincenzo D’Apice, Francesco Masala, Pierluigi Morelli
March 2024 - n. 3
Keywords: Solidità bancaria, indici aggregati, Area euro
Jel codes: G01, G21, E44

In this article we present an Index of financial soundness that summarizes the various performance indicators of the banking activity in a single value. The evolution of the index shows that the solidity of significant banks has improved considerably in recent years, both at the level of the eurozone as a whole and in the four most important countries (France, Germany, Italy and Spain): starting from 2021 all the banking sectors considered present conditions of solidity above the historical average of the euro area. Within this framework, the performance of the banks in Italy stands out. Even though they started from values lower than the euro area average and the average of the other main national banking sectors, currently they stand at the top of the solidity ranking of the sector. Furthermore, in aggregate terms and during the analysed period, the global solidity of the so-called less significant banks presents values higher than the historical average of the euro area and higher than the corresponding values of the significant banks.

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