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Regulation of multinational banks: A theoretical inquiry

  • Calzolari, Giacomo
  • Loranth, Gyongyi

This paper examines national regulators' incentives to intervene in a multinational bank's activities and the extent to which these incentives differ with the bank's foreign representation choice (branch or subsidiary). Shared liability leads to higher incentives for intervention than legal separation. Cross-border deposit insurance, on the other hand, yields less intervention than when regulators compensate local depositors only. Based on these results, we derive implications for multinational banks' and regulators' preference on foreign expansion and representation.

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Article provided by Elsevier in its journal Journal of Financial Intermediation.

Volume (Year): 20 (2011)
Issue (Month): 2 (April)
Pages: 178-198

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Handle: RePEc:eee:jfinin:v:20:y:2011:i:2:p:178-198
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622875

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  1. Acharya, Viral V, 2002. "Is the International Convergence of Capital Adequacy Regulation Desirable?," CEPR Discussion Papers 3253, C.E.P.R. Discussion Papers.
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  5. Calzolari, Giacomo & Loranth, Gyongyi, 2005. "Regulation of multinational banks: a theoretical inquiry," Working Paper Series 0431, European Central Bank.
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  9. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 162, Princeton, Woodrow Wilson School - Public and International Affairs.
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  12. Lucian Arye Bebchuk & Andrew T. Guzman, 2000. "An Economic Analysis of Transnational Bankruptcies," NBER Working Papers 6521, National Bureau of Economic Research, Inc.
  13. Gyöngyi Lóránth & Alan D. Morrison, 2007. "Deposit Insurance, Capital Regulations, and Financial Contagion in Multinational Banks," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 34(5-6), pages 917-949.
  14. Lóránth, Gyöngyi & Morrison, Alan, 2003. "Multinational Bank Regulation with Deposit Insurance and Diversification Effects," CEPR Discussion Papers 4148, C.E.P.R. Discussion Papers.
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  17. Dell'Ariccia, Giovanni & Marquez, Robert, 2006. "Competition among regulators and credit market integration," Journal of Financial Economics, Elsevier, vol. 79(2), pages 401-430, February.
  18. Giacomo Calzolari, 2004. "Incentive Regulation of Multinational Enterprises," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(1), pages 257-282, 02.
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