European Banks Straddling Borders: Risky or Rewarding?
38 Pages Posted: 25 Jul 2017
There are 2 versions of this paper
European Banks Straddling Borders: Risky or Rewarding?
Date Written: July 2017
Abstract
Theory suggests that cross-border banking is beneficial as long as there is a non-perfect correlation across country-specific risks. Using a unique hand-collected dataset with cross-border loans for the 61 largest European banks, we find that cross-border banking in general decreases bank risk, and that the beneficial impact from cross-border banking increases when banks diversify more into countries with dissimilar economic and financial conditions. However, we find that banks do not fully utilize these diversification opportunities as banks mainly invest in countries that are economically more similar to their home country.
Keywords: Bank Regulation, Financial Stability, Geographical Diversification, International Banking, Risk
JEL Classification: E44, G21, G28
Suggested Citation: Suggested Citation
0 References
0 Citations
Do you have a job opening that you would like to promote on SSRN?
- Citations
- Citation Indexes: 3
- Usage
- Abstract Views: 1184
- Downloads: 3
- Captures
- Readers: 1
- Mentions
- News Mentions: 1
- Citations
- Citation Indexes: 3
- Usage
- Abstract Views: 1184
- Downloads: 3
- Captures
- Readers: 1
- Mentions
- News Mentions: 1