Research on the Policy Environment on the Risk of Multinational Banks - Based on the Analysis of Regional Regulatory Policies and Multinational Banks

Ge Yan ()
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Ge Yan: University of New South Wales, Business School

A chapter in Proceedings of the 2022 International Conference on Economics, Smart Finance and Contemporary Trade (ESFCT 2022), 2022, pp 29-37 from Springer

Abstract: Abstract The existing financial regulatory framework makes it difficult to effectively regulate international banking as international financial services continue to innovate. Banks also tend to establish more branches and lend more to countries with less stringent regulations, which makes cross-border banks more risky. Previous research has been inadequate because regulatory policies are difficult to measure and aggregate. This paper examines the drawbacks of regional regulation and the risks of international banks. The research methodology is using regression analysis to examine the relationship between the number of US Bank Holding Company (BHC) in countries with different regulatory metrics, and the correlation between loans, deposits and real estate loans. The results of the study are as follows, due to decentralised regulation with different regulatory indicators across countries, the impact of regulations on the number of BHCs is minimal, and US BHC are more diverse and riskier in countries with weaker regulatory frameworks. During the financial crisis, loans and deposits to US BHC trended negatively and were strongly correlated. The business of BHC has been affected by the degree of regulation in the countries where they are regulated, and the long-term effects of financial crisis. Therefore, reforms in financial regulation can effectively reduce the risks posed by overseas BHCs. There should be greater cooperation between domestic and international regulation, and greater transparency in the operations of regulators and multinational institutions, as well as attention to the risks of emerging areas of fintech. The risks of financial globalization can be minimized through fair and comprehensive regulation.

Keywords: Multinational Banks; Regional Regulatory Policies; Regression Analysis; Financial Crisis (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-052-7_5

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DOI: 10.2991/978-94-6463-052-7_5

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