EconPapers    
Economics at your fingertips  
 

Multinational banking and the international transmission of financial shocks: Evidence from foreign bank subsidiaries

Bang Jeon (), Maria Olivero () and Ji Wu

Journal of Banking & Finance, 2013, vol. 37, issue 3, 952-972

Abstract: Using bank-level data on 368 foreign subsidiaries of 68 multinational banks in 47 emerging economies during 1994–2008, we present consistent evidence that internal capital markets in multinational banking contribute to the transmission of financial shocks from parent banks to foreign subsidiaries. We find that internal capital markets transmit favorable and adverse shocks by affecting subsidiaries’ reliance on their own internal funds for lending. We also find that the transmission of financial shocks varies across types of shocks; is strongest among subsidiaries in Central and Eastern Europe, followed by Asia and Latin America; is global rather than regional; and becomes more conspicuous in recent years. We also explore various conditions under which the international transmission of financial shocks via internal capital markets in multinational banking is stronger, including the subsidiaries’ reliance on funds from their parent bank, the subsidiaries’ entry mode, and the capital account openness and banking market structure in host countries.

Keywords: Internal capital markets; Multinational banking; Transmission of financial shocks (search for similar items in EconPapers)
JEL-codes: E44 F43 G21 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (37) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0378426612003317
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Multinational Banking and the International Transmission of Financial Shocks: Evidence from Foreign Bank Subsidiaries (2012) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:37:y:2013:i:3:p:952-972

Access Statistics for this article

Journal of Banking & Finance is currently edited by Ike Mathur

More articles in Journal of Banking & Finance from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-04-16
Handle: RePEc:eee:jbfina:v:37:y:2013:i:3:p:952-972