Regulatory Arbitrage and Cross-Border Syndicated Loans

Asli Demirguc-Kunt, Balint Horvath and Harry Huizinga

No 9037, Policy Research Working Paper Series from The World Bank

Abstract: This paper investigates how international regulatory and institutional differences affect lending in the cross-border syndicated loan market. Lending provided through a foreign subsidiary is subject to subsidiary-country regulation and institutional arrangements. Multinational banks'choices between loan origination through the parent bank or through a foreign subsidiary provide information about these banks'preferences to operate in countries with varying regulations and institutions. The results indicate that international banks have a tendency to switch loan origination toward countries with less stringent bank regulation and supervision consistent with regulatory arbitrage, but that they prefer to originate loans in countries with higher-quality institutions related to financial market monitoring, creditor rights, and the speed of contract enforcement.

Date: 2019-10-09
New Economics Papers: this item is included in nep-ban, nep-ifn and nep-reg
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http://documents.worldbank.org/curated/en/85642157 ... Syndicated-Loans.pdf (application/pdf)

Related works:
Working Paper: Regulatory arbitrage and cross-border syndicated loans (2019)
Working Paper: Regulatory arbitrage and cross-border syndicated loans (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:9037

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