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Multinational Banks and Supranational Supervision

Author

Listed:
  • Giacomo Calzolari

    (EUI - European University Institute)

  • Gyongyi Loranth

    (Universität Wien = University of Vienna)

Abstract

We study the supervision of multinational banks (MNBs), allowing for either national or supranational supervision. National supervision leads to insufficient monitoring of MNBs due to a coordination problem between supervisors. Supranational supervision can solve this problem and increase monitoring. However, this change has the unintended consequence of affecting the MNB's choice of foreign representation. MNBs may expand abroad using branches rather than subsidiaries, or abandon foreign expansion altogether. These changes completely neutralize the more intense monitoring that would otherwise occur with supranational supervision. Our paper provides insight into how the national boundaries of bank supervision interact with multinational banks.

Suggested Citation

  • Giacomo Calzolari & Gyongyi Loranth, 2016. "Multinational Banks and Supranational Supervision," Working Papers hal-01993365, HAL.
    • Handle: RePEc:hal:wpaper:hal-01993365
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    Cited by:

    1. Haselmann, Rainer & Singla, Shikhar & Vig, Vikrant, 2022. "Supranational supervision," LawFin Working Paper Series 50, Goethe University, Center for Advanced Studies on the Foundations of Law and Finance (LawFin).
    2. Wolf Wagner & Jing Zeng, 2023. "Too-many-to-fail and the Design of Bailout Regimes," ECONtribute Discussion Papers Series 230, University of Bonn and University of Cologne, Germany.
    3. Beck, Thorsten & Silva-Buston, Consuelo & Wagner, Wolf, 2023. "The Economics of Supranational Bank Supervision," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 58(1), pages 324-351, February.
    4. Buch, Claudia M. & Krause, Thomas & Tonzer, Lena, 2019. "Drivers of systemic risk: Do national and European perspectives differ?," Journal of International Money and Finance, Elsevier, vol. 91(C), pages 160-176.
    5. Bonfim, Diana & Santos, João A.C., 2023. "The importance of deposit insurance credibility," Journal of Banking & Finance, Elsevier, vol. 154(C).
    6. Vittoria Cerasi & Stefano Montoli, 2020. "Bank resolution and multinational banks," Working Papers 447, University of Milano-Bicocca, Department of Economics, revised Jul 2020.
    7. Gersbach, Hans & Haller, Hans & Papageorgiou, Stylianos, 2020. "Regulatory competition in banking: Curse or blessing?," Journal of Banking & Finance, Elsevier, vol. 121(C).
    8. Segura, Anatoli & Vicente, Sergio, 2018. "Bank resolution and public backstop in an asymmetric banking union," ESRB Working Paper Series 83, European Systemic Risk Board.
    9. Elena Carletti & Giovanni Dell’Ariccia & Robert Marquez, 2021. "Supervisory Incentives in a Banking Union," Management Science, INFORMS, vol. 67(1), pages 455-470, January.
    10. Rafael Repullo, 2018. "Hierarchical bank supervision," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 9(1), pages 1-26, March.
    11. Weder di Mauro, Beatrice & Faia, Ester, 2016. "Cross-Border Resolution of Global Banks: Bail in under Single Point of Entry versus Multiple Points of Entry," CEPR Discussion Papers 11171, C.E.P.R. Discussion Papers.
    12. Ding, Haina & Guembel, Alexander & Ozanne, Alessio, 2020. "Market Information in Banking Supervision: The Role of Stress Test Design," TSE Working Papers 20-1144, Toulouse School of Economics (TSE).
    13. Gropp, Reint & Mosk, Thomas & Ongena, Steven & Simac, Ines & Wix, Carlo, 2024. "Supranational Rules, National Discretion: Increasing Versus Inflating Regulatory Bank Capital?," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 59(2), pages 830-862, March.
    14. Rafael Repullo, 2017. "Hierarchical Bank Supervision," Working Papers wp2018_1718, CEMFI.
    15. Haselmann, Rainer & Singla, Shikhar & Vig, Vikrant, 2022. "Supranational supervision," LawFin Working Paper Series 46, Goethe University, Center for Advanced Studies on the Foundations of Law and Finance (LawFin).
    16. L. Deidda & E. Panetti, 2024. "Bank Recovery and Resolution Planning, Liquidity Management and Fragility," Working Paper CRENoS 202420, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    17. Näther, Maria & Vollmer, Uwe, 2019. "National versus supranational bank regulation: Gains and losses of joining a banking union," Economic Systems, Elsevier, vol. 43(1), pages 1-18.
    18. Roman Horvath, 2018. "Financial market fragmentation and monetary transmission in the euro area: what do we know?," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 21(4), pages 319-334, October.
    19. Morrison, Alan & Lóránth, Gyöngyi, 2018. "The corporate structure of multinational banks," CEPR Discussion Papers 12688, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    Cross-Border Banks; Multinational banks; Supervision; Monitoring; Regulation; Banking Union;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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