What Determines the Composition of International Bank Flows?

Cornelia Kerl and Friederike Niepmann

No 1170, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This paper studies how frictions to foreign bank operations affect the sectoral composition of banks? foreign positions, their funding sources and international bank flows. It presents a parsimonious model of banking across borders, which is matched to bank-level data and used to quantify cross-border frictions. The counterfactual analysis shows how higher barriers to foreign bank entry alter the composition of international bank flows and may reverse the direction of net interbank flows. It also highlights that interbank lending and lending to non-banking firms respond differently to changes in foreign and domestic conditions. Ultimately, the analysis suggests that policies that change cross-border banking frictions and, thereby, the composition of banks? foreign activities affect how shocks are transmitted across borders.

Keywords: Global banks; Interbank market; International bank flows; Cross-border banking (search for similar items in EconPapers)
JEL-codes: F21 F23 F30 G21 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2016-06
New Economics Papers: this item is included in nep-ban, nep-ifn and nep-opm
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http://www.federalreserve.gov/econresdata/ifdp/2016/files/ifdp1170.pdf (application/pdf)

Related works:
Working Paper: What determines the composition of international bank flows? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:1170

DOI: 10.17016/IFDP.2016.1170

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