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The resilience of banks' international operations

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  • Patrick McGuire
  • Goetz von Peter

Abstract

This feature explores the resilience of banks' balance sheets after the 2008-09 financial crisis through the lens of a unique global data set crossing bank nationality and host country. We start by documenting post-crisis changes in the structure of BIS reporting banks' global operations across bank nationalities. We then zero in on the funding mix of banks' foreign affiliates (branches and subsidiaries) on the eve of the crisis, and how it helps explain the subsequent contraction of credit. We find that local claims backed by local funding made balance sheets more resilient, even after accounting for systematic differences between host countries and banking systems. By contrast, affiliates shrank more sharply if they had relied pre-crisis on non-core sources of funding, in the form of interbank, foreign currency and cross-border funding.

Suggested Citation

  • Patrick McGuire & Goetz von Peter, 2016. "The resilience of banks' international operations," BIS Quarterly Review, Bank for International Settlements, March.
  • Handle: RePEc:bis:bisqtr:1603g
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    References listed on IDEAS

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    9. Ingo Fender & Patrick McGuire, 2010. "Bank structure, funding risk and the transmission of shocks across countries: concepts and measurement," BIS Quarterly Review, Bank for International Settlements, September.
    10. Stefan Avdjiev & Patrick McGuire & Philip Wooldridge, 2015. "Enhanced data to analyse international banking," BIS Quarterly Review, Bank for International Settlements, September.
    11. Tanju Yorulmazer, 2014. "Literature review on the stability of funding models," Economic Policy Review, Federal Reserve Bank of New York, issue Feb, pages 3-16.
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    Cited by:

    1. Michael Brei & Carlos Winograd, 2018. "Credit risk of foreign bank branches and subsidiaries in Argentina and Uruguay," EconomiX Working Papers 2018-12, University of Paris Nanterre, EconomiX.
    2. Stefan Avdjiev & Bryan Hardy & Patrick McGuire & Goetz von Peter, 2020. "Home sweet host: Prudential and monetary policy spillovers through global banks," BIS Working Papers 853, Bank for International Settlements.
    3. Brei, Michael & von Peter, Goetz, 2018. "The distance effect in banking and trade," Journal of International Money and Finance, Elsevier, vol. 81(C), pages 116-137.
    4. Avdjiev, Stefan & Aysun, Uluc & Hepp, Ralf, 2019. "What drives local lending by global banks?," Journal of International Money and Finance, Elsevier, vol. 90(C), pages 54-75.
    5. McCauley, Robert N. & Bénétrix, Agustín S. & McGuire, Patrick M. & von Peter, Goetz, 2019. "Financial deglobalisation in banking?," Journal of International Money and Finance, Elsevier, vol. 94(C), pages 116-131.
    6. Rodriguez-Moreno, Maria & Argimón, Isabel & Ortiz, Elena Fernández, 2020. "Retrenchment of euro area banks and international banking models," ESRB Working Paper Series 112, European Systemic Risk Board.

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