BPI Bank Conditions Index (BPIBCI) is a quantitative assessment of the resiliency of the U.S. banking sector. The index is constructed using a wide range of indicators that are commonly used to characterize the condition of the banking sector. BPIBCI synthesizes data on 24 banking indicators grouped into six categories: capital, liquidity, risk-aversion, asset quality, interconnectedness and profitability. A description of the methodology used to construct BPIBCI is available, as well as the underlying data and an extended appendix. Both the charts and the data will be updated quarterly. For an analysis of the most recent release see our blog.
Following the aftermath of the past global financial crisis, a series of key capital and liquidity regulations have been enacted — Basel III, annual stress tests, GSIB capital surcharge — which have contributed to an increase in banks’ capital levels, more liquid balance sheets and a reduction in the degree of connection between financial institutions. Among many other potential uses, the BPIBCI will help researchers to assess the impact of changes in the regulatory landscape on overall bank condition as well as a large variety of banking indicators.
A value of the index close to 100 corresponds to a maximally resilient banking sector as it has ever been since the start of the analysis. In contrast, a value close to 0 implies that the U.S. banking sector is as vulnerable as it has even been relative to the start of the sample. A value of the index close to 50 indicates that the level of vulnerabilities is in the midpoint of its historical range.