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Global Banks' Dynamics and the International Transmission of Shocks

Author

Listed:
  • Stefania Garetto

    (Boston University)

  • Martin Goetz

    (Goethe University, Frankfurt am Main)

  • Jose Fillat

    (Federal Reserve Bank of Boston)

Abstract

15% of the loans in the US are held by foreign banking institutions, headquartered in more than 50 countries. Using bank-level data, we present novel stylized facts describing characteristics of foreign institutions and compare them to the incumbent set of banks, distinguishing foreign banks by their mode of entry. We incorporate these facts into a structural model of entry in the banking sector where profit maximizing foreign banks decide whether and how to enter a foreign market. The model sheds light on the relationship between market access, capital flows, regulation, and entry, and has implications for the risk exposure that different organizational forms entail.

Suggested Citation

  • Stefania Garetto & Martin Goetz & Jose Fillat, 2014. "Global Banks' Dynamics and the International Transmission of Shocks," 2014 Meeting Papers 1333, Society for Economic Dynamics.
    • Handle: RePEc:red:sed014:1333
    as

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    References listed on IDEAS

    as
    1. Niepmann, Friederike, 2015. "Banking across borders," Journal of International Economics, Elsevier, vol. 96(2), pages 244-265.
    2. José L. Fillat & Stefania Garetto, 2015. "Risk, Returns, and Multinational Production," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(4), pages 2027-2073.
    3. Franziska Bremus & Claudia M. Buch & Katheryn N. Russ & Monika Schnitzer, 2018. "Big Banks and Macroeconomic Outcomes: Theory and Cross‐Country Evidence of Granularity," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 50(8), pages 1785-1825, December.
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    5. Linda S Goldberg, 2009. "Understanding Banking Sector Globalization," IMF Staff Papers, Palgrave Macmillan, vol. 56(1), pages 171-197, April.
    6. Dixit, Avinash K, 1989. "Entry and Exit Decisions under Uncertainty," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 620-638, June.
    7. Nicola Cetorelli & Linda S Goldberg, 2011. "Global Banks and International Shock Transmission: Evidence from the Crisis," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 59(1), pages 41-76, April.
    8. repec:lmu:muenar:20226 is not listed on IDEAS
    9. de Blas, Beatriz & Russ, Katheryn Niles, 2013. "All banks great, small, and global: Loan pricing and foreign competition," International Review of Economics & Finance, Elsevier, vol. 26(C), pages 4-24.
    10. Andrew B. Bernard & J. Bradford Jensen & Peter K. Schott, 2009. "Importers, Exporters and Multinationals: A Portrait of Firms in the U.S. that Trade Goods," NBER Chapters, in: Producer Dynamics: New Evidence from Micro Data, pages 513-552, National Bureau of Economic Research, Inc.
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    Full references (including those not matched with items on IDEAS)

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