SIFIs and the Financial Crisis

Document Type

Book Chapter

Publication Date



This chapter will provide an overview of systemic risk and the financial institutions that have become known as SIFIs (systemically important financial institutions). It will also highlight the major factors that led to the financial crisis of 2007–09 in the US and eventually in the European Union. The evolution of bank SIFIs and shadow banks will be described, as well as the role they played in the crisis, before we detail the myriad of financial derivative products that have been developed, their incredible growth in the space of a few years and the problems associated with the measurement of their risk. Finally, the role of the regulators and regulations in contributing to the crisis is examined, together with the regulations and guidelines developed to prevent a recurrence of the crisis.