International Transmission of Liquidity Shocks Between Parent Banks and Their Affiliates: The Host Country Perspective

NBP Working Paper No. 172

38 Pages Posted: 15 Mar 2014

See all articles by Malgorzata Pawlowska

Malgorzata Pawlowska

National Bank of Poland

Dobromil Serwa

National Bank of Poland; Warsaw School of Economics (SGH)

Slawomir Zajączkowski

National Bank of Poland

Date Written: March 3, 2014

Abstract

In this study we analyze how funding liquidity shocks affecting large international banks were transmitted to Polish subsidiaries and branches of these banks in recent years. We investigate differences in the effects of liquidity shocks on banks owned by both Polish and foreign institutions. All Polish banks reacted to liquidity shocks after Lehman Brothers failure; however, only Polish subsidiaries and branches of foreign parent banks adjusted their funding after liquidity shocks had taken place during the sovereign debt crisis of the Eurozone. Mortgage lending in foreign currencies was also affected by liquidity shocks during the crisis. Our results suggest that the intragroup links between banking institutions can serve both as an important channel for international transmission of liquidity shocks and as a stabilizing mechanism during liquidity crises.

Keywords: liquidity shocks, international transmission, parent banks, affiliate banks, Poland

JEL Classification: E44, F34, G32

Suggested Citation

Pawlowska, Malgorzata and Serwa, Dobromil and Zajączkowski, Slawomir, International Transmission of Liquidity Shocks Between Parent Banks and Their Affiliates: The Host Country Perspective (March 3, 2014). NBP Working Paper No. 172, Available at SSRN: https://ssrn.com/abstract=2408442 or http://dx.doi.org/10.2139/ssrn.2408442

Malgorzata Pawlowska (Contact Author)

National Bank of Poland ( email )

00-919 Warsaw
Poland

Dobromil Serwa

National Bank of Poland ( email )

00-919 Warsaw
Poland

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

Slawomir Zajączkowski

National Bank of Poland ( email )

00-919 Warsaw
Poland

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