Spillover Effects of Cross-Border Bank Acquisitions on Systemic Risk

2021 ◽  
Author(s):  
John Sedunov ◽  
Alvaro G. Taboada
Keyword(s):  
Systemic Risk ◽  
Spillover Effects ◽  
Cross Border

Banking Globalization

2019 ◽  
pp. 927-952
Author(s):  
Claudia M. Buch ◽  
Gayle L. Delong
Keyword(s):  
Financial Crisis ◽  
Systemic Risk ◽  
Commercial Banks ◽  
Banking Industry ◽  
International Banking ◽  
Foreign Markets ◽  
Risk Effects ◽  
Cross Border ◽  
International Bank ◽  
International Banks

The financial crisis has renewed interest in the globalization of the banking industry, the patterns of entry into foreign markets, and the effects of complex banking organizations. There is a rich body of literature on international banks, which has recently been expanded by the improved theoretical modeling of the international banking firm and by focusing on implications for (systemic) risk. In this chapter, we focus on three main questions. First, what are the determinants of cross-border entry through acquisitions of commercial banks? Second, what are the effects of cross-border entry on complexity and the efficiency of banks? Third, what are the risk effects of international bank acquisitions, in particular with regard to systemic risk? We begin with a brief summary of the stylized facts, and we conclude with implications for researchers and policymakers.

scholarly journals Domestic Lending and the Pandemic: How Does Banks' Exposure to Covid-19 Abroad Affect Their Lending in the United States?

2021 ◽  
Vol 2021 (056) ◽  
pp. 1-45
Author(s):  
Judit Temesvary ◽  
◽  
Andrew Wei ◽  
Keyword(s):  
United States ◽  
Spillover Effects ◽  
The United States ◽  
Registry Data ◽  
Cross Border ◽  
Foreign Countries ◽  
The U.S

We study how U.S. banks' exposure to the economic fallout due to governments' response to Covid-19 in foreign countries has affected their credit provision to borrowers in the United States. We combine a rarely accessed dataset on U.S. banks' cross-border exposure to borrowers in foreign countries with the most detailed regulatory ("credit registry") data that is available on their U.S.-based lending. We compare the change in the U.S. lending of banks that are more vs. less exposed to the pandemic abroad, during and after the onset of Covid-19 in 2020. We document strong spillover effects: U.S. banks with higher foreign exposures in badly "Covid-19-hit" regions cut their lending in the United States substantially more. This effect is particularly strong for longer-maturity loans and term loans and is robust to controlling for firms’ pandemic exposure.

Ethiopia shows East Africa leadership transition risks

2015 ◽  
Keyword(s):  
East Africa ◽  
Prime Minister ◽  
Spillover Effects ◽  
Leadership Transition ◽  
Foreign Investors ◽  
Content Type ◽  
Political Dynamics ◽  
Cross Border ◽  
Leadership Transitions ◽  
Resistance Movement

Subject The outlook for leadership transitions in East Africa. Significance Ethiopia, Uganda and Rwanda are ruled by parties that transformed from armed liberation movements. The Ethiopian People's Democratic Revolutionary Front (EPRDF), Uganda's National Resistance Movement (NRM) and the Rwandan Patriotic Front (RPF) all took power within a few years of one another. They maintain party-to-party contacts and run tightly-controlled states which hold regular and ostensibly multiparty elections. Ethiopia's forthcoming elections in May will be the first since the death of liberation-era Prime Minister Meles Zenawi. Its leadership transition provides signals for the region's other post-liberation states. Impacts Institutionalised leadership transitions would help provide regulatory clarity to foreign investors. Unstable transitions in any of these countries would have regional spillover effects, given cross-border political dynamics. Strong, coherent military institutions may prove an important guarantor of a stable transition, barring direct interference in politics.

scholarly journals BANK PANICS AND FIRE SALES, INSOLVENCY AND ILLIQUIDITY

2018 ◽  
Vol 21 (06) ◽  
pp. 1850040 ◽  
Author(s):  
T. R. HURD
Keyword(s):  
Systemic Risk ◽  
Banking System ◽  
Spillover Effects ◽  
Mathematical Representation ◽  
Regulatory Regime ◽  
Main Stream ◽  
Dual Channel ◽  
Modelling Assumptions ◽  
Stock Flow ◽  
External Economy

Banking system crises are complex events that in a short span of time can inflict extensive damage to banks themselves and to the external economy. The crisis literature has so far identified a number of distinct effects or channels that can propagate distress contagiously both directly within the banking network itself and indirectly, between the network and the external economy. These contagious effects, and the potential events that trigger these effects, can explain most aspects of past crises, and are thought to be likely to dominate future financial crises. Since the current international financial regulatory regime based on the Basel III Accord does a good job of ensuring that banks are resilient to such contagion effects taken one at a time, systemic risk theorists increasingly understand that future crises are likely to be dominated by the spillovers between distinct contagion channels. The present paper aims to provide a model for systemic risk that is comprehensive enough to include the important contagion channels identified in the literature. In such a model one can hope to understand the dangerous spillover effects that are expected to dominate future crises. To rein in the number and complexity of the modelling assumptions, two requirements are imposed, neither of which is yet well-known or established in the main stream of systemic risk research. The first, called stock-flow consistency, demands that the financial system follows a rigorous set of rules based on accounting principles. The second requirement, called asset-liability symmetry, implies that every proposed contagion channel has a dual channel obtained by interchanging assets and liabilities, and that these dual channel pairs have a symmetric mathematical representation.

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