The shrinking role of foreign operations at global financial institutions and its impact on efficiency

Michael S. Pagano

Finance Research Letters, 2021, vol. 38, issue C

Abstract: In response to the U.S. and Eurozone financial crises of 2008–2009 and 2010–2012, global financial institutions are under greater scrutiny by investors and regulators. This study finds that these global financial institutions have dramatically reduced their foreign operations which, in turn, has coincided with increased inefficiency during 2014–2017. The firms’ retreat to their home regions is nonlinearly related to inefficiency and has led to inefficiency returning to levels last seen in 2009–2011. These findings indicate that the level of foreign operations is an important determinant that should be included when measuring a large financial firm's efficiency.

Keywords: Foreign operations; Large financial institutions; Efficiency; International Finance (search for similar items in EconPapers)
JEL-codes: G2 G21 G23 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:38:y:2021:i:c:s154461231931150x

DOI: 10.1016/j.frl.2019.101419

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