Multinational Banks and Supranational Supervision

57 Pages Posted: 25 Apr 2016 Last revised: 12 Jan 2017

See all articles by Giacomo Calzolari

Giacomo Calzolari

European University Institute - Economics Department (ECO); Centre for Economic Policy Research (CEPR); University of Bologna

Jean-Edouard Colliard

HEC Paris - Finance Department

Gyongyi Loranth

University of Vienna; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 3 versions of this paper

Date Written: January 10, 2017

Abstract

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

Calzolari, Giacomo and Colliard, Jean-Edouard and Loranth, Gyongyi, Multinational Banks and Supranational Supervision (January 10, 2017). HEC Paris Research Paper No. FIN-2016-1152. Available at SSRN: https://ssrn.com/abstract=2769219 or http://dx.doi.org/10.2139/ssrn.2769219

Giacomo Calzolari (Contact Author)

European University Institute - Economics Department (ECO) ( email )

Villa la Fonte
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San Domenico di Fiesole, Florence 50014
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Centre for Economic Policy Research (CEPR) ( email )

London
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University of Bologna ( email )

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I-40126 Bologna
Italy

HOME PAGE: http://sites.google.com/view/giacomo-calzolari

Jean-Edouard Colliard

HEC Paris - Finance Department ( email )

France

Gyongyi Loranth

University of Vienna ( email )

Vienna

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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