The Resilience of Banks' International Operations

14 Pages Posted: 9 Mar 2016

See all articles by Patrick McGuire

Patrick McGuire

Bank for International Settlements (BIS)

Goetz von Peter

Bank for International Settlements - Research and Policy Analysis

Date Written: March 6, 2016

Abstract

This feature explores the resilience of banks' balance sheets after the 2008-09 financial crisis through the lens of a unique global data set crossing bank nationality and host country. We start by documenting post-crisis changes in the structure of BIS reporting banks' global operations across bank nationalities. We then zero in on the funding mix of banks' foreign affiliates (branches and subsidiaries) on the eve of the crisis, and how it helps explain the subsequent contraction of credit. We find that local claims backed by local funding made balance sheets more resilient, even after accounting for systematic differences between host countries and banking systems. By contrast, affiliates shrank more sharply if they had relied pre-crisis on non-core sources of funding, in the form of interbank, foreign currency and cross-border funding.

JEL Classification: F34, G01, G21

Suggested Citation

McGuire, Patrick M. and von Peter, Goetz, The Resilience of Banks' International Operations (March 6, 2016). BIS Quarterly Review March 2016, Available at SSRN: https://ssrn.com/abstract=2744864

Patrick M. McGuire (Contact Author)

Bank for International Settlements (BIS) ( email )

CH-4002 Basel, Basel-Stadt
Switzerland

Goetz Von Peter

Bank for International Settlements - Research and Policy Analysis ( email )

CH-4002 Basel, Basel-Stadt
Switzerland
+ 41 61 280 8840 (Phone)

HOME PAGE: http://www.bis.org/author/goetz_von_peter.htm

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