Key Charts - Too-Big-To-Fail
Financial Stability: Low-Income Countries Were Better Off During the Crisis
- The peak-to-trough metric for return on equity shows that low income countries have had more stability in equity returns than any other income level.
- The financial meltdown of 2008 caused a sudden shift in dynamics for high-income countries. Just prior to it, banks enjoyed a boom in profitability—high returns on assets and equity—while their stability was declining, as demonstrated by sliding Z-scores.
- The impact of the crisis was mitigated for lower-income countries because their banking systems had little exposure to complex financial instruments such as mortgage-backed securities which can be verified by their higher return on assets and return on equity and increasing Z-scores from 2007 to 2008.
Source: World Bank Global Financial Development Database