Multinational Banks and Supranational Supervision
57 Pages Posted: 25 Apr 2016 Last revised: 12 Jan 2017
Date Written: January 10, 2017
We study the supervision of multinational banks (MNBs), allowing for either national or supranational supervision. National supervision leads to insufficient monitoring of MNBs due to a coordination problem between supervisors. Supranational supervision can solve this problem and increase monitoring. However, this change has the unintended consequence of affecting the MNB's choice of foreign representation. MNBs may expand abroad using branches rather than subsidiaries, or abandon foreign expansion altogether. These changes completely neutralize the more intense monitoring that would otherwise occur with supranational supervision. Our paper provides insight into how the national boundaries of bank supervision interact with multinational banks.
Keywords: Cross-Border Banks, Multinational banks, Supervision, Monitoring, Regulation, Banking Union
JEL Classification: L51, F23, G21, G28
Suggested Citation: Suggested Citation