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Should cross-border banking benefit from the financial safety net?

Title	Should cross-border banking benefit from the financial safety net?
Author	Bertay, Ata Can, Demirgüç-Kunt, A., Huizinga, H.
Publication Date:	2016
Publication Place	- Elsevier
Subject	Bank bailouts, International burden sharing, Cross-border banking
Type	Periodical
Language	English
Digital	Yes
Manuscript	No
Library:	Özyeğin University
Library Asset ID	1042-9573
Record ID	bbcda951-5a3a-43fc-a232-e4d2698270b2
Library Location	International Finance
Date	2016
Sample Text	Using bank-level data from 84 countries, we find that a higher degree of bank internationalization is associated with higher interest expenses. Internationalization is proxied by a bank's share of foreign liabilities in total liabilities or a Herfindahl index of international liability concentration. Bank interest expenses rise relatively more with internationalization if the bank is underperforming or headquartered in a country with weak public finances, and especially at times of weak world output growth. These results suggest that liability holders of distressed internationalized banks expect less from the financial safety net since lack of an efficient recovery and resolution regime for international banks can make their insolvency very costly to deal with.
DOI	10.1016/j.jfi.2016.05.005

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Özyeğin University

Should cross-border banking benefit from the financial safety net?

Author Bertay, Ata Can, Demirgüç-Kunt, A., Huizinga, H.

Publication Date 2016

Publication Place - Elsevier

Subject Bank bailouts, International burden sharing, Cross-border banking

Type Periodical

Language English

Digital Yes

Manuscript No

Library Özyeğin University

Library Asset ID 1042-9573

Record ID bbcda951-5a3a-43fc-a232-e4d2698270b2

Library Location International Finance

Date 2016

Sample Text Using bank-level data from 84 countries, we find that a higher degree of bank internationalization is associated with higher interest expenses. Internationalization is proxied by a bank's share of foreign liabilities in total liabilities or a Herfindahl index of international liability concentration. Bank interest expenses rise relatively more with internationalization if the bank is underperforming or headquartered in a country with weak public finances, and especially at times of weak world output growth. These results suggest that liability holders of distressed internationalized banks expect less from the financial safety net since lack of an efficient recovery and resolution regime for international banks can make their insolvency very costly to deal with.

DOI 10.1016/j.jfi.2016.05.005