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Retrenchment of euro area banks and international banking models

Isabel Argimon (), Elena Fernández Ortiz and Maria Rodriguez-Moreno ()

No 112, ESRB Working Paper Series from European Systemic Risk Board

Abstract: In this paper, we analyze the importance of international banking models, along the operational and the funding dimensions, for the decline in international positions of European banks since the crisis. Using BIS Consolidated Banking Statistics, we find that the multinational model (higher reliance on local activity) and the decentralized model (higher weight of local funding over local claims) is associated with lower retrenchment. We also find that more business synchronization between the home and the host economy is associated with higher declines in lending after the crisis and that the multinational and decentralized models mitigate such effect. On the other hand, lending to banks is not affected by the correlation of economic cycles between the home and the host country. JEL Classification: F21, F23, G15, G21

Keywords: cross-border bank lending; financial crisis; global banking; retrenchment (search for similar items in EconPapers)
Date: 2020-11
New Economics Papers: this item is included in nep-ban and nep-eec
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Handle: RePEc:srk:srkwps:2020112