Foreign Ownership, Bank Information Environments, and the International Mobility of Corporate Governance
Yiwei Fang, Iftekhar Hasan, Woon Sau Leung, Qingwei Wang
Journal of International Business Studies,
Nr. 9,
2019
Abstract
This paper investigates how foreign ownership shapes bank information environments. Using a sample of listed banks from 60 countries over 1997–2012, we show that foreign ownership is significantly associated with greater (lower) informativeness (synchronicity) in bank stock prices. We also find that stock returns of foreign-owned banks reflect more information about future earnings. In addition, the positive association between price informativeness and foreign ownership is stronger for foreign-owned banks in countries with stronger governance, stronger banking supervision, and lower monitoring costs. Overall, our evidence suggests that foreign ownership reduces bank opacity by exporting governance, yielding important implications for regulators and governments.
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01.04.2019 • 8/2019
Banken steigern Ertrag, wenn Fusionsschranken fallen
Wenn durch den Wegfall politischer Konsolidierungsbarrieren aus zwei Banken eine wird, wird das neu entstandene Institut deutlich profitabler und nützlicher für die Realwirtschaft. Zu diesem Schluss kommt eine Untersuchung von zwangsfusionierten Sparkassen, durchgeführt vom Leibniz-Institut für Wirtschaftsforschung Halle (IWH). Aus der Studie ergeben sich wichtige Erkenntnisse für den deutschen und den europäischen Bankenmarkt.
Michael Koetter
Pressemitteilung lesen
Big Fish in Small Banking Ponds? Cost Advantages and Foreign Affiliate Presences
Michael Koetter, Rients Galema
Journal of International Money and Finance,
2018
Abstract
We distinguish cost advantage at home from cost advantage vis-à-vis incumbent banks in destination markets to explain the probability of foreign bank affiliate lending. We combine detailed affiliate lending data of all German banks with public bank micro data from 59 destination markets. The likelihood to operate foreign affiliates depends positively on both types of cost advantage. Only cost advantage at home is economically significant. Generally, risk, return, and unobservable bank traits explain a larger share of the variation in foreign affiliate operations. Less profitable, more risky, and larger banks are more likely to operate affiliates abroad.
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International Banking and Cross-Border Effects of Regulation: Lessons from Canada
H. Evren Damar, Adi Mordel
International Journal of Central Banking,
Nr. 1,
2017
Abstract
We study how changes in prudential requirements affect cross-border lending of Canadian banks by utilizing an index that aggregates adjustments in key regulatory instruments across jurisdictions. We show that when a destination country tightens local prudential measures, Canadian banks increase the growth rate of lending to that jurisdiction, and the effect is particularly significant when capital requirements are tightened and weaker if banks lend mainly via affiliates. Our evidence also suggests that Canadian banks adjust foreign lending in response to domestic regulatory changes. The results confirm the presence of heterogeneous spillover effects of foreign prudential requirements.
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International Banking and Cross-border Effects of Regulation: Lessons from Germany
Jana Ohls, Markus Pramor, Lena Tonzer
International Journal of Central Banking,
Supplement 1, March
2017
Abstract
We analyze the inward and outward transmission of regulatory changes through German banks’ (international) loan portfolio. Overall, our results provide evidence for international spillovers of prudential instruments. These spillovers are, however, quite heterogeneous between types of banks and can only be observed for some instruments. For instance, domestic affiliates of foreign-owned global banks reduce their loan growth to the German economy in response to a tightening of sector-specific capital buffers, local reserve requirements, and loan-to-value ratios in their home country. Furthermore, from the point of view of foreign countries, tightening reserve requirements is effective in reducing lending inflows from German banks. Finally, we find that business and financial cycles matter for lending decisions.
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Kommentar: Finanzforschung in Halle: Passt das?
Reint E. Gropp
Wirtschaft im Wandel,
Nr. 1,
2017
Abstract
Das IWH hat in den letzten Jahren seine Kapazitäten in der Finanzforschung stark ausgebaut: Eine eigene Abteilung mit mehr als 20 Forschern wurde eingerichtet, darunter zwei W3- und demnächst vier W1-Professuren. Darüber hinaus stellt das IWH eine Datenbank und einen Forschungshub zum Thema „International Banking“ zur Verfügung. Andere Aktivitäten, zum Beispiel im Bereich Industrieökonomik oder Stadtökonomik, wurden deutlich reduziert, um Ressourcen für die neuen Aktivitäten freizumachen.
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International Banking and Cross-border Effects of Regulation: Lessons from Germany
Jana Ohls, Markus Pramor, Lena Tonzer
Abstract
We analyze the inward and outward transmission of regulatory changes through German banks’ (international) loan portfolio. Overall, our results provide evidence for international spillovers of prudential instruments, these spillovers are however quite heterogeneous between types of banks and can only be observed for some instruments. For instance, foreign banks located in Germany reduce their loan growth to the German economy in response to a tightening of sector-specific capital buffers, local reserve requirements and loan to value ratios in their home country. Furthermore, from the point of view of foreign countries, tightening reserve requirements was effective in reducing lending inflows from German banks. Finally, we find that business and financial cycles matter for lending decisions.
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International Banking and Liquidity Risk Transmission: Evidence from Canada
James Chapman, H. Evren Damar
IMF Economic Review,
Nr. 3,
2015
Abstract
This paper investigates how liquidity conditions in Canada may affect domestic and/or foreign lending of globally active Canadian banks, and whether this transmission is influenced by individual bank characteristics. It finds that Canadian banks expanded their foreign lending during the recent financial crisis, often through acquisitions of foreign banks. It also finds evidence that internal capital markets play a role in the lending activities of globally active Canadian banks during times of heightened liquidity risk.
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Cross-border Interbank Networks, Banking Risk and Contagion
Lena Tonzer
Journal of Financial Stability,
2015
Abstract
Recent events have highlighted the role of cross-border linkages between banking systems in transmitting local developments across national borders. This paper analyzes whether international linkages in interbank markets affect the stability of interconnected banking systems and channel financial distress within a network consisting of banking systems of the main advanced countries for the period 1994–2012. Methodologically, I use a spatial modeling approach to test for spillovers in cross-border interbank markets. The results suggest that foreign exposures in banking play a significant role in channeling banking risk: I find that countries that are linked through foreign borrowing or lending positions to more stable banking systems abroad are significantly affected by positive spillover effects. From a policy point of view, this implies that in stable times, linkages in the banking system can be beneficial, while they have to be taken with caution in times of financial turmoil affecting the whole system.
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Financial Stability and Central Bank Governance
Michael Koetter, Kasper Roszbach, G. Spagnolo
International Journal of Central Banking,
Nr. 4,
2014
Abstract
The financial crisis has ignited a debate about the appropriate objectives and the governance structure of Central Banks. We use novel survey data to investigate the relation between these traits and banking system stability focusing in particular on their role in micro-prudential supervision. We find that the separation of powers between single and multiple bank supervisors cannot explain credit risk prior or during the financial crisis. Similarly, a large number of Central Bank governance traits do not correlate with system fragility. Only the objective of currency stability exhibits a significant relation with non-performing loan levels in the run-up to the crisis. This effect is amplified for those countries with most frequent exposure to IMF missions in the past. Our results suggest that the current policy discussion whether to centralize prudential supervision under the Central Bank and the ensuing institutional changes some countries are enacting may not produce the improvements authorities are aiming at. Whether other potential improvements in prudential supervision due to, for example, external disciplinary devices, such as IMF conditional lending schemes, are better suited to increase financial stability requires further research.
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