Multinational banking and the international transmission of financial shocks: Evidence from foreign bank subsidiaries

Jeon, Bang Nam; Olivero, María Pía; Wu, Ji

doi:10.1016/j.jbankfin.2012.10.020

Cited by 104 publications

(67 citation statements)

References 41 publications

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“…6 Empirical evidence emerging from the crisis suggests that the presence of multinational banks increases the risk of instability from abroad (de Haas & van Lelyveld, 2011;Jeon et al, 2013). This contrasts with previous evidence that foreign banks contribute to credit market stabilization in their host markets (see Haselmann, 2006;de Haas & van Lelyveld, 2006, 2010.…”

Section: Estimation Of the Lerner Indexmentioning

confidence: 93%

Market power in CEE banking sectors and the impact of the global financial crisis

Efthyvoulou

Yıldırım

2014

Journal of Banking & Finance

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Article available under the terms of the CC-BY-NC-ND licence (https://creativecommons.org/licenses/by-nc-nd/4.0/) eprints@whiterose.ac.uk https://eprints.whiterose.ac.uk/ Reuse Unless indicated otherwise, fulltext items are protected by copyright with all rights reserved. The copyright exception in section 29 of the Copyright, Designs and Patents Act 1988 allows the making of a single copy solely for the purpose of non-commercial research or private study within the limits of fair dealing. The publisher or other rights-holder may allow further reproduction and re-use of this version -refer to the White Rose Research Online record for this item. Where records identify the publisher as the copyright holder, users can verify any specific terms of use on the publisher's website. TakedownIf you consider content in White Rose Research Online to be in breach of UK law, please notify us by emailing eprints@whiterose.ac.uk including the URL of the record and the reason for the withdrawal request. AbstractThe aim of this study is to undertake an up-to-date assessment of market power in Central and Eastern European banking markets and explore how the global financial crisis has affected market power and what has been the impact of foreign ownership. Three main results emerge. First, while there is some convergence in country-level market power during the pre-crisis period, the onset of the global crisis has put an end to this process. Second, bank-level market power appears to vary significantly with respect to ownership characteristics. Third, asset quality and capitalization affect differently the margins in the pre-crisis and the crisis periods. While in the pre-crisis period the impacts are similar for all banks regardless of ownership status, in the crisis period non-performing loans have a negative effect and capitalization a positive effect only for domestically-owned banks.

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Section: Estimation Of the Lerner Indexmentioning

confidence: 93%

Market power in CEE banking sectors and the impact of the global financial crisis

Efthyvoulou

Yıldırım

2014

Journal of Banking & Finance

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“…From a theoretical perspective, multinational banks rely on internal capital markets to shift risk from headquarters to subsidiaries, to reallocate revenues in either direction or across subsidiaries, and in general to allocate resources in an efficient manner, in order to optimally adjust to financial frictions in different markets (Jeon et al, 2013).…”

Section: Introductionmentioning

confidence: 99%

International Banking Conglomerates and the Transmission of Lending Shocks Across Borders

Gropp,

Radev

2017

SSRN Journal

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We investigate how solvency and wholesale funding shocks to 84 OECD parent banks affect the lending of 375 foreign subsidiaries. We find that parent solvency shocks are more important than wholesale funding shocks for subsidiary lending. Furthermore, we find that parent undercapitalization does not affect the transmission of shocks, while wholesale shocks transmit to foreign subsidiaries of parents that rely primarily on wholesale funding. We also find that transmission is affected by the strategic role of the subsidiary for the parent and follows a locational, rather than an organizational pecking order. Surprisingly, liquidity regulation exacerbates the transmission of adverse wholesale shocks. We further document that parent banks tend to use their own capital and liquidity buffers first, before transmitting. Finally, we show that solvency shocks have higher impact on large subsidiary banks with low growth opportunities in mature markets.JEL classification: G01, G21, G28

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“…It is key to stress that foreign banks in emerging markets and developing countries have around 50 percent of the market share in terms of loans, deposits and profits (see Claessens and van Horen, 2012 Stein (2013), and by Adrian 9 Our paper also contributes to the literature in international finance that shows that foreign shocks affects the local economy through the banking sector (Peek and Rosengren. 2000;Mian, 2006;Acharya and Schnabl, 2010;Schnabl, 2012;Giannetti and Laeven, 2012;Popov and Udell, 2012;De Haas andVan Horen, 2012, 2013;Jeon, Olivero and Wu, 2013). We contribute to this literature by analyzing the foreign monetary shocks through foreign banks and quantifying the credit supply and real outcome elasticities associated to central banking policies.…”

mentioning

confidence: 99%

The International Bank Lending Channel of Monetary Policy Rates and QE: Credit Supply, Reach-for-Yield, and Real Effects

2015

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Multinational banking and the international transmission of financial shocks: Evidence from foreign bank subsidiaries

Cited by 104 publications

References 41 publications

Market power in CEE banking sectors and the impact of the global financial crisis

Market power in CEE banking sectors and the impact of the global financial crisis

International Banking Conglomerates and the Transmission of Lending Shocks Across Borders

The International Bank Lending Channel of Monetary Policy Rates and QE: Credit Supply, Reach-for-Yield, and Real Effects

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