Retrenchment of Euro Area Banks and International Banking Models

28 Pages Posted: 16 Nov 2020 Last revised: 18 Nov 2021

Date Written: November, 2020

Abstract

In this paper, we analyze the importance of international banking models, along the operational and the funding dimensions, for the decline in international positions of European banks since the crisis. Using BIS Consolidated Banking Statistics, we find that the multinational model (higher reliance on local activity) and the decentralized model (higher weight of local funding over local claims) is associated with lower retrenchment. We also find that more business synchronization between the home and the host economy is associated with higher declines in lending after the crisis and that the multinational and decentralized models mitigate such effect. On the other hand, lending to banks is not affected by the correlation of economic cycles between the home and the host country.

JEL Classification: F21, F23, G15, G21

Suggested Citation

Argimón, Isabel and Ortiz, Elena and Rodriguez-Moreno, Maria, Retrenchment of Euro Area Banks and International Banking Models (November, 2020). ESRB: Working Paper Series 2020/112, Available at SSRN: https://ssrn.com/abstract=3731413 or http://dx.doi.org/10.2139/ssrn.3731413

Isabel Argimón

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

HOME PAGE: http://www.bde.es

Elena Ortiz

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Maria Rodriguez-Moreno (Contact Author)

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

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