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Retrenchment of euro area banks and international banking models

Author

Listed:
  • Argimón, Isabel
  • Ortiz, Elena Fernández
  • Rodriguez-Moreno, Maria

Abstract

In this paper, we analyze the importance of international banking models, along the operational and the funding dimensions, for the decline in international positions of European banks since the crisis. Using BIS Consolidated Banking Statistics, we find that the multinational model (higher reliance on local activity) and the decentralized model (higher weight of local funding over local claims) is associated with lower retrenchment. We also find that more business synchronization between the home and the host economy is associated with higher declines in lending after the crisis and that the multinational and decentralized models mitigate such effect. On the other hand, lending to banks is not affected by the correlation of economic cycles between the home and the host country. JEL Classification: F21, F23, G15, G21

Suggested Citation

  • Argimón, Isabel & Ortiz, Elena Fernández & Rodriguez-Moreno, Maria, 2020. "Retrenchment of euro area banks and international banking models," ESRB Working Paper Series 112, European Systemic Risk Board.
    • Handle: RePEc:srk:srkwps:2020112
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    File URL: https://www.esrb.europa.eu//pub/pdf/wp/esrb.wp112~854beb59ac.en.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    cross-border bank lending; financial crisis; global banking; retrenchment;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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