Supervising Cross-Border Banks: Theory, Evidence and Policy (Revised version of EBC Discussion Paper 2011-033)

T.H.L. Beck, R.I. Todorov, W.B. Wagner

Research output: Working paperDiscussion paperOther research output

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Abstract

Abstract: This paper analyzes the distortions that banks’ cross-border activities, such as foreign assets, deposits and equity, can introduce into regulatory interventions. We find that while each individual dimension of cross-border activities distorts the incentives of a domestic regulator, a balanced amount of cross-border activities does not necessarily cause inefficiencies, as the various distortions can offset each other. Empirical analysis using bank-level data from the recent crisis provide support to our theoretical findings. Specifically, banks with a higher share of foreign deposits and assets and a lower foreign equity share were intervened at a more fragile state, reflecting the distorted incentives of national regulators. We discuss several implications for the supervision of cross-border banks in Europe.
Original languageEnglish
Place of PublicationTilburg
PublisherEBC
Number of pages43
Volume2012-015
Publication statusPublished - 2012

Publication series

NameEBC Discussion Paper
Volume2012-015

Fingerprint

Cross-border
Equity
Deposits
Assets
Incentives
Supervision
Inefficiency
Empirical analysis

Keywords

  • Bank regulation
  • bank resolution
  • cross-border banking

Cite this

Beck, T. H. L., Todorov, R. I., & Wagner, W. B. (2012). Supervising Cross-Border Banks: Theory, Evidence and Policy (Revised version of EBC Discussion Paper 2011-033). (EBC Discussion Paper; Vol. 2012-015). Tilburg: EBC.
Beck, T.H.L. ; Todorov, R.I. ; Wagner, W.B. / Supervising Cross-Border Banks : Theory, Evidence and Policy (Revised version of EBC Discussion Paper 2011-033). Tilburg : EBC, 2012. (EBC Discussion Paper).
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Beck, THL, Todorov, RI & Wagner, WB 2012 'Supervising Cross-Border Banks: Theory, Evidence and Policy (Revised version of EBC Discussion Paper 2011-033)' EBC Discussion Paper, vol. 2012-015, EBC, Tilburg.

Supervising Cross-Border Banks : Theory, Evidence and Policy (Revised version of EBC Discussion Paper 2011-033). / Beck, T.H.L.; Todorov, R.I.; Wagner, W.B.

Tilburg : EBC, 2012. (EBC Discussion Paper; Vol. 2012-015).

Research output: Working paperDiscussion paperOther research output

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Beck THL, Todorov RI, Wagner WB. Supervising Cross-Border Banks: Theory, Evidence and Policy (Revised version of EBC Discussion Paper 2011-033). Tilburg: EBC. 2012. (EBC Discussion Paper).