Cross-border banking in the EU since the crisis: What is driving the great retrenchment?
Martin Schmitz and
Additional contact information
Marcel Tirpák: European Central Bank
Review of World Economics (Weltwirtschaftliches Archiv), 2019, vol. 155, issue 2, No 4, 287-326
Abstract This paper examines the drivers of the retrenchment in cross-border banking in the European Union (EU) since the global financial crisis, which stands out in international comparison as banks located in the euro area and in the rest of the EU reduced their cross-border claims by around 25%. Particularly striking is the sharp and sustained reduction in intra-EU claims, especially in the form of deleveraging from cross-border interbank loans. Examining a wide range of possible determinants, we identify high non-performing loans as an important impediment to cross-border lending after the crisis, highlighting the spillovers from national banking sector conditions across the EU. We also find evidence that prudential policies can entail spillovers via cross-border banking in the EU, albeit with heterogeneity across instruments in terms of direction, magnitude and significance. Our results do not point to a major role of newly introduced bank levies in explaining cross-border banking developments.
Keywords: Cross-border banking; International capital flows; Deleveraging; Financial integration; Prudential policies; Regulation; Bank levy (search for similar items in EconPapers)
JEL-codes: F21 F30 F42 G15 G28 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s10290-019-00342-5 Abstract (text/html)
Access to the full text of the articles in this series is restricted.
Working Paper: Cross-border banking in the EU since the crisis: what is driving the great retrenchment? (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:spr:weltar:v:155:y:2019:i:2:d:10.1007_s10290-019-00342-5
Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10290/PS2
Access Statistics for this article
Review of World Economics (Weltwirtschaftliches Archiv) is currently edited by Paul Bergin, Holger Görg, Cédric Tille and Gerald Willmann
More articles in Review of World Economics (Weltwirtschaftliches Archiv) from Springer, Institut für Weltwirtschaft (Kiel Institute for the World Economy) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().