Since the Global Crisis, international banks have reduced cross-border lending but continued to lend through their branches and affiliates overseas. This column argues that the observed shift was to a significant extent driven by regulatory changes. It should improve financial stability in host countries of foreign banks.
Gaston Gelos, Frederic Lambert, Sunday, May 17, 2015 - 00:00
Piotr Danisewicz, Dennis Reinhardt, Rhiannon Sowerbutts, Thursday, March 5, 2015 - 00:00
Philippe Karam, Ouarda Merrouche, Moez Souissi, Rima Turk, Monday, February 2, 2015 - 00:00
Georg Ringe, Jeffrey N. Gordon, Wednesday, January 28, 2015 - 00:00
Franziska Bremus, Marcel Fratzscher, Wednesday, January 28, 2015 - 00:00
Stijn Claessens, Neeltje van Horen, Saturday, December 6, 2014 - 00:00
The Global Financial Crisis has triggered a reduction in cross-border bank lending. This column uses evidence from an updated bank ownership database to show that global banking is not becoming more fragmented. It is rather going through structural transformations. Banks from countries hit by crises are reducing their foreign presence, while banks from emerging and developing markets are stepping into the void.
Atish R Ghosh, Mahvash Saeed Qureshi, Naotaka Sugawara, Thursday, October 30, 2014 - 00:00
Capital flows to emerging markets have been very volatile since the global financial crisis. This has kindled debates on whether – and how – to better manage cross-border capital flows. In this column, the authors examine the role of capital account restrictions in both source and recipient countries in taming destabilising capital flows. The results indicate that capital account restrictions at either end can significantly lower the volume of cross-border flows.
Dennis Reinhardt, Steven Riddiough, Wednesday, May 7, 2014 - 00:00
Cross-border funding between banks collapsed following the bankruptcy of Lehman Brothers, but the withdrawal of funding was not uniform across countries. This column argues that the composition of cross-border bank-to-bank funding can help to explain why. Interbank funding between unrelated banks is particularly vulnerable to global shocks, but intragroup funding between related banks can act as a stabilising force, particularly for advanced economies with a high share of global parent banks. Policymakers should look at disaggregated cross-border bank-to-bank flows, as doing otherwise could result in a misleading assessment of financial stability risks.
Erik Feyen, Raquel Letelier, Inessa Love, Samuel Munzele Maimbo, Roberto Rocha, Saturday, March 15, 2014 - 00:00
Eastern Europe was hit especially hard by the credit crunch during the global financial crisis. This column presents new evidence suggesting that reliance on foreign funding was more important than foreign bank ownership per se in exacerbating the post-crisis credit contraction. These findings point to the need to put more emphasis on the discussion of bank business models, regulatory standards, and supervisory arrangements.
Richard Baldwin, Friday, March 30, 2012 - 00:00
Risk-taking by banks played a critical role in the global crisis and Eurozone crisis. This column introduces a new eReport that focuses on four aspects of excessive risk-taking by banks, highlighting the causes and the cures. The eReport applies the best available theory and data, bringing together the main insights and views that have emerged from the crisis.
Andrea F Presbitero, Gregory F Udell, Alberto Zazzaro, Sunday, February 12, 2012 - 00:00
Understanding credit crunches is a major concern for policymakers. This column suggests that the severity of a credit crunch in a specific area depends on the hierarchical structure of the banks operating in that credit market. It explores the Italian case and shows that, in the months following the collapse of Lehman Brothers, banks retracted disproportionally from markets that are more distant from their headquarters.
Stijn Claessens, Neeltje van Horen, Tuesday, January 31, 2012 - 00:00
How did foreign banks adjust their investment and lending decisions during the global financial crisis? This column uses a new and comprehensive database to show that the crisis dramatically halted foreign direct investment in banking and that foreign banks often cut back on lending more than their domestic competitors. While exits have so far been limited, this is likely to change in the coming years.
Stijn Claessens, Neeltje van Horen, Saturday, January 28, 2012 - 00:00
Foreign banks on domestic soil have always been controversial. This column presents a newly collected, comprehensive database on bank ownership for 137 countries over the period 1995–2009. It shows that current market shares of foreign banks average 20% in OECD countries and 50% elsewhere. In developing countries, however, foreign bank presence is correlated with less private credit.
Iman van Lelyveld, Marco Spaltro, Thursday, October 27, 2011 - 00:00
The dissent brewing throughout Europe hinges on the question of whether the financial burdens of the Eurozone crisis should be shared between weak and strong. This column presents a new paper arguing that the wealthier, more stable economies don’t have much choice.
Dirk Schoenmaker, Tuesday, October 25, 2011 - 00:00
Responses to the financial crisis have largely been along national lines. Governments rescued banks headquartered within their borders, and supervisors are requiring banks to match their assets and liabilities at a national level. This column says stable cross-border banking is incompatible with national financial supervision, which means the European banking market needs European authorities.
Thorsten Beck, Wolf Wagner, Philip R. Lane, Dirk Schoenmaker, Elena Carletti, Franklin Allen, Monday, June 20, 2011 - 00:00
This CEPR report argues that policy reforms in micro- and macro-prudential regulation and macroeconomic policies are needed for Europe to reap the important diversification and efficiency benefits from cross-border banking, while reducing the risks stemming from large cross-border banks.