Cross-Border Banking on the Two Sides of the Atlantic: Does it Have an Impact on Bank Crisis Management?

34 Pages Posted: 23 Nov 2015 Last revised: 30 Aug 2017

See all articles by Maria Nieto

Maria Nieto

Banco de España

Larry D. Wall

Federal Reserve Bank of Atlanta - Research Department

Multiple version iconThere are 2 versions of this paper

Date Written: 2015-11-01

Abstract

In the United States and the European Union (EU), political incentives to oppose cross-border banking have been strong in spite of the measurable benefits to the real economy from breaking down geographic barriers. Even a federal-level supervisor and safety net are not by themselves sufficient to incentivizing cross-border banking although differences in the institutional set-up are reflected in the way the two areas responded to the crisis. The U.S. response was a coordinated response, and the cost of resolving banks was borne at the national level. Moreover, the Federal Deposit Insurance Corporation (FDIC) could market failed banks to other banks irrespective of state boundaries, reducing the cost of the crisis to the U.S. economy and the sovereign finances. In the EU, the crisis resulted in financial market fragmentation and unbearable costs to some sovereigns. Moreover, the FDIC could market failed banks to other banks irrespective of state boundaries, reducing the cost of the crisis to the U.S. economy and the sovereign finances. In the EU, the crisis resulted in financial market fragmentation and unbearable costs to some sovereigns.

Keywords: cross-border banking, financial crisis, bankruptcy, European Union, United States

JEL Classification: G01, G21, G28, K20, L51

Suggested Citation

Nieto, Maria J. and Wall, Larry D., Cross-Border Banking on the Two Sides of the Atlantic: Does it Have an Impact on Bank Crisis Management? (2015-11-01). FRB Atlanta Working Paper No. 2015-11. Available at SSRN: https://ssrn.com/abstract=2693949

Maria J. Nieto (Contact Author)

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Larry D. Wall

Federal Reserve Bank of Atlanta - Research Department ( email )

1000 Peachtree Street, NE
Atlanta, GA 30309-4470
United States
404-498-8937 (Phone)
404-498-8956 (Fax)

HOME PAGE: http://www.frbatlanta.org/econ_rd/bios/wall.htm

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
40
Abstract Views
589
PlumX Metrics