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Concentration in Asia’s Cross-border Banking: Determinants and Impacts

Ana Kristel Lapid (), Rogelio Mercado and Peter Rosenkranz ()
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Ana Kristel Lapid: Asian Development Bank

Economic Papers from Trinity College Dublin, Economics Department

Abstract: Cross-border bank positions in the Asia and the Pacific region remain highly concentrated to few counterparties, exposing the region to financial risks and policy spillovers. Consequently, assessing the determinants and impacts of the region’s cross-border banking concentration is relevant in designing appropriate policies to promote financial development and safeguard financial stability. To this end, we construct cross-border bank concentration measures for 47 economies in Asia and the Pacific from 2000 to 2019. The results show that higher capital account and trade openness as well as per capita income are significantly associated with lower cross-border bank concentration. Moreover, elevated cross-border bank concentration tends to lower domestic credit growth and nonperforming loans, while we find no impact on bank profitability for the region.

Keywords: cross-border bank exposures; cross-border bank concentration; credit growth; non-performing loans; bank profitability; Asia and the Pacific (search for similar items in EconPapers)
JEL-codes: E44 F36 G21 O16 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2021-01
New Economics Papers: this item is included in nep-cwa, nep-int, nep-mac and nep-sea
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