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Foreign banks’ asset reallocation in response to the introduction of the intermediate holding company rule of 2016

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  • Paligorova, Teodora
  • Temesvary, Judit

Abstract

We examine the effect of the 2016 intermediate holding company (IHC) rule on the asset allocation of foreign banking organizations (FBOs) in the United States. Given the costs to establish and maintain an IHC, FBOs may try to reduce the regulatory weight by reallocating assets from the U.S.-regulated IHC-subject activities towards less regulated U.S. branches and agencies (including those located abroad) or downsize the IHC's total assets. We use data on within-FBO transactions to show that the introduction of the IHC rule spurred FBOs to reallocate their assets from (“U.S.-regulated”) U.S. subsidiaries toward their (“less regulated”) U.S. branches and agencies.

Suggested Citation

  • Paligorova, Teodora & Temesvary, Judit, 2022. "Foreign banks’ asset reallocation in response to the introduction of the intermediate holding company rule of 2016," Finance Research Letters, Elsevier, vol. 47(PB).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pb:s1544612322000708
    DOI: 10.1016/j.frl.2022.102750
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    References listed on IDEAS

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    More about this item

    Keywords

    Foreign banks; Bank regulation; Branches and subsidiaries;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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