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Corporate Governance and Intre-group Transactions in European Bank Holding Companies during the Crisis

Franklin Allen, Xian Gu and Oskar Kowalewski ()
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Franklin Allen: University of PA

Working Papers from University of Pennsylvania, Wharton School, Weiss Center

Abstract: In this paper we study the intra-group transactions between the parent bank and its foreign subsidiaries in European Union countries during the crisis. We use hand-collected data from annual statements on related party transaction and find that they may create a serious problem for the stability of the foreign banks' subsidiaries. Moreover, as some of those subsidiary banks were large by assets in some of the member states the related party transactions with the parent bank created a serious threat to host countries financial system stability. We attribute this transaction to weak governance in foreign subsidiaries. We suggest improvements in governance as well greater disclosure of related party transactions in bank holding companies in Europe.

JEL-codes: G21 G28 G38 (search for similar items in EconPapers)
Date: 2011-02
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:upafin:11-35

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