Evidence of Regulatory Arbitrage in Cross-Border Mergers of Banks in the EU
AbstractBanks are in the business of taking calculated risks. Expanding the geographic footprint of an organization’s profit-making activities changes the geographic pattern of its exposure to loss in ways that are hard for regulators and supervisors to observe. This paper tests and confirms the hypothesis that differences in the character of safety-net benefits that are available to banks in individual EU countries help to explain the nature of cross-border merger activity. If they wish to protect taxpayers from potentially destabilizing regulatory arbitrage, central bankers need to develop statistical procedures for assessing supervisory strength and weakness in partner countries. We believe that the methods and models used here can help in this task.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15447.
Date of creation: Oct 2009
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Find related papers by JEL classification:
- F3 - International Economics - - International Finance
- G2 - Financial Economics - - Financial Institutions and Services
- K2 - Law and Economics - - Regulation and Business Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-10-31 (All new papers)
- NEP-BAN-2009-10-31 (Banking)
- NEP-BEC-2009-10-31 (Business Economics)
- NEP-COM-2009-10-31 (Industrial Competition)
- NEP-EEC-2009-10-31 (European Economics)
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