The Internationalization of American Banking and Finance: Structure, Risk, adn World Interest Rates

Michael Darby ()

No 1989, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The transformation of American banking from the parochialism of 1960 to the internationally linked structure of the 1980s is analyzed and detailed quantitatively. While the liberalization of trade and the existence of and changes in financial regulations profoundly affected the pace and order of this transformation, it is argued that international banking is the historic norm. International banking on the one hand provides the opportunity to banks to diversify their portfolio, but may simultaneously expose them to increased systematic risk, especially with regards to movements in the U.S. real interest rate. Deposit insurance provides an incentive for banks to take on such priced systematic risk with welfare costs which must be balanced against the welfare gains from the insurance. The paper closes with an exploration of the nature of the linkage of major movements in real interest rates and exchange rates. Further research seems warranted on monetary-policy-regime changes and investment-demand shifts as a result of changes in tax, regulatory, and political climate.

Date: 1986-07
Note: ITI IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Published as Darby, Michael R."The Internationalization of American Banking and Finance:structure, Risk, and World Interest Rates," Journal of International Money and Finance, Vol. 5, No. 4, (December 1986).

Downloads: (external link)
http://www.nber.org/papers/w1989.pdf (application/pdf)

Related works:
Journal Article: The internationalization of American banking and finance: Structure, risk, and world interest rates (1986)
Working Paper: The Internationalization of American Banking and Finance: Structure, Risk, and World Interest Rates (1985)
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:nbr:nberwo:1989

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w1989

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().