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Shock Transmission through International Banks: Austria

Author

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  • Esther Segalla

    () (Oesterreichische Nationalbank, Economic Studies Division)

Abstract

This study provides findings on the transmission of liquidity shocks by Austrian parent banks through the lending channel. I investigate how different types of parent banks adjust their balance sheet positions in response to a liquidity shock and how such an adjustment is transmitted into destination countries. I distinguish between three definitions of crossborder lending activities. In the most general definition I analyze changes in total lending, which consists of the two components - lending to banks and lending to non-banks. In a second step I concentrate on a narrower definition of lending, that is lending to nonaffiliated banks. Finally I focus on an even more targeted definition, such as lending to affiliated banks (lending to branches and subsidiaries). I find that (1) smaller banks (parent banks without affiliates) did not adjust their balance sheet composition in a very pronounced manner in response to a liquidity shock. (2) Large banks (parent banks with affiliates) did decrease moderately their cross-border loan share to other, non-affiliated banks. (3) Internal capital markets are important for the funding structure of Austrian parent banks and their foreign affiliates. (4) Destination countries matter. Countries signing the Vienna Initiative do receive strong support through the internal capital market.

Suggested Citation

  • Esther Segalla, 2015. "Shock Transmission through International Banks: Austria," Working Papers 199, Oesterreichische Nationalbank (Austrian Central Bank).
  • Handle: RePEc:onb:oenbwp:199
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    File URL: https://www.oenb.at/dam/jcr:6d3b6474-ccec-48d1-acaf-79a01832c886/WP199_screen.pdf
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    Citations

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    Cited by:

    1. Claudia M Buch & Linda S Goldberg, 2015. "International Banking and Liquidity Risk Transmission: Lessons from Across Countries," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 63(3), pages 377-410, November.
    2. Esther Segalla, 2015. "When Austrian banks cross borders," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 29, pages 110-121.

    More about this item

    Keywords

    cross-border lending; liquidity risk; shock transmission; internal capital markets; Vienna Initiative.;

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F30 - International Economics - - International Finance - - - General
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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