Cross-border banking claims on emerging countries: The Basel III Banking Reforms in a push and pull framework

Figuet, Jean-Marc; Humblot, Thomas; Lahet, Delphine

doi:10.1016/j.intfin.2014.11.016

Cited by 14 publications

(8 citation statements)

References 33 publications

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“…The opposite holds for the unemployment rate of the host region and entry regulation of the respective country. These variables affect branching decisions negatively, which is in accordance with Figuet et al (2015), whose findings suggest that regulation (in their case, banking reforms of the Third Basel Accord) can decrease cross-border banking. The nonmultilevel ZIP and ZINB models correctly estimated 84.3 and 87.9 percent of the zeros, respectively.…”

Section: Variables Data Sources and Specification Of The Modelsupporting

confidence: 83%

Cross-border branching in the Latin American banking sector

Fávero

Santos

Serra

2018

IJBM

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Purpose Branching is not the only way for foreign banks to enter a national market, and it is impractical when there are informational and cultural barriers and asymmetries among countries. The purpose of this paper is to analyze the determinants of cross-border branching in the Latin American banking sector, a region with regulatory disparity and political and economic instability, offering elements to a grounded strategic decision. Design/methodology/approach This study uses data from six Latin American countries. To account for the preponderance of zero counts, classes of zero-inflated models are applied (Poisson, negative binomial, and mixed). Model fit indicators obtained from differences between observed and estimated counts are used for comparisons, considering branches in each region established by banks from every other foreign region of the sample. Findings Branching by foreign banks is positively correlated with the population, GDP per capita, household disposable income, and economic freedom score of the host country. The opposite holds for the unemployment rate and entry regulations of the host country. Originality/value Few paper address cross-border banking in emerging economies. This paper analyzes cross-border branching in Latin America in the context of the current financial integration and bank strategy. Econometrically, its pioneering design allows modeling of inflation of zeros, over-dispersion, and the multilevel data structure. This design allowed testing of a novel country-level variable: the host country’s economic freedom score.

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Section: Variables Data Sources and Specification Of The Modelsupporting

confidence: 83%

Cross-border branching in the Latin American banking sector

Fávero

Santos

Serra

2018

IJBM

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“…Effective limits on banks' risk‐taking activities, as well as rules that ensure banks keep sufficient liquidity and capital buffers to withstand macroeconomic shocks, are essential to maintain financial stability. However, these bank regulations limit the scale and scope of banks' activities (Figuet, Humblot, and Lahet ) and therefore cut into banks' profits. As a result, globally active banks have strong incentives to engage in regulatory arbitrage, that is, to strategically move resources across borders to less‐regulated countries in order to minimize the incidence of regulatory burden.…”

Section: Introductionmentioning

confidence: 99%

The Role of Regulatory Arbitrage in U.S. Banks' International Flows: Bank‐level Evidence

Temesváry

2018

Economic Inquiry

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I study the prevalence and profitability of regulatory arbitrage in U.S. banks' foreign activities. I analyze a publicly available bank‐level data set on bilateral lending flows to 75 countries over 2003–2013. U.S. banks' affiliates lend less to borrowers in host countries with stricter bank capital regulations, and are less likely to maintain affiliates in such countries. Banks substitute from (host‐regulated) affiliate toward (U.S.‐regulated) cross‐border lending in hosts with strict bank capital rules. This is particularly so for low‐capitalized banks with lower foreign ownership shares. Banks that reduce their exposure to stricter host capital rules are more profitable in foreign activities. (JEL F3, F4, G2)

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“…Regionalization in banking sector during post-crisis period was analyzed by Claessens and van Horen (2015) and Lambert et al (2015). On the other hand, push, pull, regulatory and monetary policy factors, which could influence cross-border bank claims allocation into certain regions over the other ones are widely debated in the literature (Bremus & Fratzscher, 2015;Butkiewicz & Gordon, 2013;Figuet et al, 2015). Possible regionalization of the banking network, especially in certain regions, represents a gap in theoretical and empirical banking network's literature and, hence, network regionalization analysis may provide important insights of special characteristics of regional networks within the global context.…”

Section: Introductionmentioning

confidence: 99%

Assessment of EU banking network regionalization during post-crisis period

Gaigalienė

Jurakovaitė

Legenzova

2018

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Research background: Recent financial crisis of 2007–2008 has influenced global banking system and led to reduction of cross-border bank lending in the EU and worldwide. Global banking network has been analysed extensively in prior or post-crisis periods, but the literature on regionalization is scarce, especially with regard to the banking sector in the EU. Moreover, in previous empirical research evaluation of banking sector regionalization using network analysis methodology has not been yet applied. Purpose of the article: The aim of the article is to map the EU banking network and to assess its regionalization during post-crisis period. Methods: the paper employs comparative literature analysis and synthesis; BIS bilateral interbank cross-border claim yearly flows matrix data and network analysis method (including network mapping, structural and comparative analysis and the data of intraregional and interregional banking network matrices) to assess the changes in regionalization of the EU banking system. Findings & Value added: The results of the research show that during post-crisis period both, EU 12 and EU 28, banking networks became more clustered and more decentralized; also the level of regionalization within the EU banking network increased. Such results prove that the EU banking network has undergone structural changes with respect to bilateral interbank cross-border claims. This research adds to the knowledge of regionalization processes within the EU banking network during the post-crisis period and intends to be beneficial for market participants, EU level governmental bodies and financial policy makers.

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Cross-border banking claims on emerging countries: The Basel III Banking Reforms in a push and pull framework

Cited by 14 publications

References 33 publications

Cross-border branching in the Latin American banking sector

Cross-border branching in the Latin American banking sector

The Role of Regulatory Arbitrage in U.S. Banks' International Flows: Bank‐level Evidence

Assessment of EU banking network regionalization during post-crisis period

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