Does government intervention affect banking globalisation?

Andrew Rose, Anya Kleymenova and Tomasz Wieladek

No 11108, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Using data from British and American banks, we provide empirical evidence that government intervention affects banking globalization along three dimensions: depth, breadth and persistence. We examine depth by studying whether a bank’s preference for domestic, as opposed to external, lending (funding) changes when it is subjected to a large public intervention, such as bank nationalization. Our results suggest that, following nationalization, non-British banks allocate their lending away from the UK and increase their external funding. Second, we find that nationalized banks from the same country tend to have portfolios of foreign assets that are spread across countries in a way that is far more similar than either private banks from the same country or nationalized banks from different countries, consistent with an impact on the breadth of globalization. Third, we study the Troubled Asset Relief Program (TARP) to examine the persistence of the effect of large government interventions. We find weak evidence that upon entry into the TARP, foreign lending declines but domestic does not. This effect is observable at the aggregate level, and seems to disappear upon TARP exit. Collectively, this evidence suggests that large government interventions affect the depth and breadth of banking globalization, but may not persist after public interventions are unwound.

Keywords: Liability; Banks; Data; Empirical; Panel; Effect; Domestic; Foreign; Nationalization; Tarp (search for similar items in EconPapers)
JEL-codes: F36 G28 (search for similar items in EconPapers)
Date: 2016-02
New Economics Papers: this item is included in nep-cfn
References: View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://cepr.org/publications/DP11108 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Does Government Intervention Affect Banking Globalization? (2016)
Journal Article: Does government intervention affect banking globalization? (2016)
Working Paper: Does Government Intervention Affect Banking Globalization? (2016)
Chapter: Does Government Intervention Affect Banking Globalization? (2015)
Working Paper: Does Government Intervention Affect Banking Globalization?
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:cpr:ceprdp:11108

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP11108

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().