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The shrinking role of foreign operations at global financial institutions and its impact on efficiency

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  • Pagano, Michael S.

Abstract

In response to the U.S. and Eurozone financial crises of 2008–2009 and 2010–2012, global financial institutions are under greater scrutiny by investors and regulators. This study finds that these global financial institutions have dramatically reduced their foreign operations which, in turn, has coincided with increased inefficiency during 2014–2017. The firms’ retreat to their home regions is nonlinearly related to inefficiency and has led to inefficiency returning to levels last seen in 2009–2011. These findings indicate that the level of foreign operations is an important determinant that should be included when measuring a large financial firm's efficiency.

Suggested Citation

  • Pagano, Michael S., 2021. "The shrinking role of foreign operations at global financial institutions and its impact on efficiency," Finance Research Letters, Elsevier, vol. 38(C).
    • Handle: RePEc:eee:finlet:v:38:y:2021:i:c:s154461231931150x
    DOI: 10.1016/j.frl.2019.101419
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    References listed on IDEAS

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    4. Pagano, Michael S. & Sedunov, John, 2016. "A comprehensive approach to measuring the relation between systemic risk exposure and sovereign debt," Journal of Financial Stability, Elsevier, vol. 23(C), pages 62-78.
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    Cited by:

    1. Pampurini, Francesca & Pezzola, Annagiulia & Quaranta, Anna Grazia, 2024. "Lending business models and FinTechs efficiency," Finance Research Letters, Elsevier, vol. 65(C).
    2. Pagano, Michael S., 2022. "How do Equity Investors Assess the Efficiency of Global Financial Institutions?," Finance Research Letters, Elsevier, vol. 49(C).

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    More about this item

    Keywords

    Foreign operations; Large financial institutions; Efficiency; International Finance;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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