March 21, 2018

Cross-border bank regulation and supervision

Internationally active banks can be a source of systemic risk as a default of one bank can easily spill over to banks in other countries. This implies that financial market stability in one country influences stability in another country. For this reason, different countries should have an incentive to cooperate. However, regulation and supervision of banks are still more present on the national than on the supranational level. On the one hand, the recent crisis has shown that regulation and supervision limited to the national level are not sufficient to prevent financial instabilities. On the other hand, different countries are very heterogeneous. For this reason, it will not be possible to align supranational regulation and supervision with banking sector specific characteristics of individual countries. The following research papers are focusing on how to implement regulation and supervision across countries. Thereby, they also discuss the tradeoff regarding regulation and supervision on the national and supranational level.

Published papers

Agarwal, S., D. Lucca, A. Seru, and F. Trebbi (2014). Inconsistent regulators: Evidence from banking. Quarterly Journal of Economics 129(2): 889-938.

Allen, F., T. Beck, E. Carletti, P. Lane, D. Schoenmaker and W. Wagner (2011). Cross-border banking in Europe: Implications for Financial Stability and Macroeconomic Policies. CEPR eReport, London.

Dell’Ariccia, G., and R. Marquez (2006). Competition among regulators and credit market integration. Journal of Financial Economics 79(2): 401–430.

Avdjiev, S., C. Koch, P. McGuire, and G. von Peter (2017). International prudential policy spillovers: a global perspective. International Journal of Central Banking 13(1): 505-544.

Beck, T., and W. Wagner (2013). Supranational supervision: How much and for whom? International Journal of Central Banking 12(2): 221-268.

Beck, T., R. Todorov, and W. Wagner (2013). Supervising cross-border banks: Theory, evidence and policy. Economic Policy 28(73): 5-44.

Beltrattia,A., and R. M. Stulz (2012). The credit crisis around the globe: Why did some banks perform better? Economic of Financial Economics105(1): 1-17.

Bouvard, M., P. Chaigneau, and A. De Motta (2015). Transparency in the financial system: Rollover risk and crises. Journal of Finance 70(4): 1805-1837.

Calzolari, G., and G. Loranth (2011). Regulation of multinational banks: A theoretical inquiry. Journal of Financial Intermediation 20(2): 178-198.

Cecchetti, S.G., D. Domanski, and G. von Peter (2011). New regulation and the new world of global banking. National Institute Economic Review 216(1): R29-R40.

Cerutti E., G. Hale, and C. Minoiu (2014). Financial crises and the composition of cross-border lending. Journal of International Money and Finance 52:60-81

Cihak, M., A. Demirgüç-Kunt, M.S. Martínez Pería, and A. Mohseni-Cheraghlou (2013). Bank regulation and supervision in the context of the global crisis. Journal of Financial Stability 9(4): 733-746.

Garcia, G. G., and M.J. Nieto (2007). Preserving financial stability: A dilemma for the European Union. Contemporary Economic Policy 25(3): 444-458.

Goodhart, C.A.E., A.K. Kashyap, D.P. Tsomocos, and A. P. Vardoulakis (2013). An integrated framework for analyzing multiple financial regulations. International Journal of Central Banking 9(1): 109-144.

Górnicka, L.A, and M.A. Zoican (2016). Too-international-to-fail? Supranational bank resolution and market discipline. Journal of Banking and Finance 65: 41-68.

Gros, D., and D. Schoenmaker (2014). European deposit insurance and resolution in the banking union. Journal of Common Market Studies 52(3): 529-546.

De Haan, J., and J. Klomp (2012). Banking risk and regulation: Does one size fit all? Journal of Banking and Finance 36(12): 3197-3212.

Hardy, D.C., and M.J. Nieto (2011). Cross-border coordination of prudential supervision and deposit guarantees. Journal of Financial Stability7(3): 155-164.

Houston, J.F. , C. Lin, and Y. Ma (2012). Regulatory arbitrage and international bank flows. The Journal of Finance 67(5): 1845-1895.

De Jonghe, O. (2010). Back to the basics in banking? A micro-analysis of banking system stability. Journal of Financial Intermediation 19(3): 387–417.

Johannesen, N. and G. Zucmann (2014). The End of Bank Secrecy? An Evaluation of the G20 Tax Haven Crackdown. American Economic Journal 6(1): 65-91.

Kahn, C. M., and J.A.C. Santos (2005). Allocating bank regulatory powers: Lender of last resort, deposit insurance and supervision. European Economic Review 49(8): 2107-2136.

Karolyi, G. A., and A. G. Taboada (2013). Regulatory arbitrage and cross-border bank acquisitions. The Journal of Finance 70(6): 2395-2450.

Kloemp, J., and J. de Haan (2015). Bank Regulation, the Quality of Institutions, and Banking Risk in Emerging and Developing Countries: An Empirical Analysis. Emerging Markets Finance and Trade 50(6):19-40.

Korinek, A., and D. Sandri (2016). Capital controls or macroprudential regulation? Journal of International Economics 99(2): 27-42.

Masciandaro, D., M.J. Nieto, and M. Quintyn (2011). Exploring governance of the new European Banking Authority—A case for harmonization? Journal of Financial Stability 7(4): 204-214.

Moenninghoff, S.C., S. Ongena, and A. Wieandt (2015). The Perennial Challenge to Counter Too-Big-to-Fail in Banking: Empirical Evidence from the New International Regulation Dealing with Global Systemically Important Banks. Journal of Banking & Finance 7(4): 204-214.

Morrison, A. D., and L. White (2009). Level playing fields in international financial regulation. The Journal of Finance 64(3): 1099–1142.

Niepmann, F., and T. Schmidt-Eisenlohr (2013). Bank bailouts, international linkages, and cooperation. American Economic Journal: Economic Policy 5(4): 270-305.

Nieto, M. J., and G. J. Schinasi (2008). Towards an EU framework for safeguarding financial stability. Journal for Institutional Comparisons 6(3): 27-36.

Paul, S., S. Stein, and A. Uhde (2012). Measuring the Quality of Banking Supervision Revisited: Assessments by German Banks Before and During the Financial Crisis. Journal of Governance and Regulation 3(1): 84-96.

Sanja J., H. Degryse, and S. Ongena (2015). A review of empirical research on the design and impact of regulation in the banking sector.Annual Review of Financial Economics (Forthcoming).

Straetmans, S., and S.M. Chaudhry (2013). Tail risks and systemic risks for US and Eurozone financial institutions in the wake of the global financial crisis. Journal of International Money and Finance 58: 191-223.

Schoenmaker, D. (2012). Banking supervision and resolution: the European dimension. Law and Financial Markets Review 6(1): 52-60.

Ongena, S., A. A. Popov, and G.F. Udell (2013). “When the cat’s away the mice will play”: Does regulation at home affect bank risk-taking abroad? Journal of Financial Economics 108(3): 727-750.

Vives, X. (2001). Restructuring financial regulation in the European monetary union. Journal of Financial Services Research 19(1): 57-82.

 

Working and discussion papers

Altmann, T. C. (2006). Cross-border banking in Central and Eastern Europe. Issues and implications for supervisory and regulatory organization on the European level. University of Wharton, Working Paper 61.

Beck, T., E. Carletti, and I. Goldstein (2016). Financial Regulation in Europe: Foundations and Challenges. CEPR Discussion Papers 11147.

Bostandzic, D., and G. N. F. Weiss (2013). Why do U.S. banks contribute more to global systemic risk? SFB 823 Discussion Paper Nr. 36/2013.

Calzolari, G., J.-E. Colliard and G. Loranth (2016). Multinational Banks and Supranational Supervision. CEPR Discussion Paper 11326.

Carletti, E., G. Dell’Ariccia and R. Marquez (2015). Supervisory incentives in a banking union. Mimeo.

Colliard, J.-E. (2015). Optimal supervisory architecture and financial integration in a banking union. ECB Working Paper 1786/2015.

Dávila, E., and A. Walther (2017). Does Size Matter? Bailouts with Large and Small Banks. NBER Working Paper No. 24132.

De Marco, F., and T. Wieladek (2016). The Real Effects of Capital Requirements and Monetary Policy: Evidence from the United Kingdom. CEPR Discussion Paper 11265.

Eisenbach, T.M., David O. Lucca, Robert M. Townsend (2016). The Economics of Bank Supervision. NBER Working Paper No. 22201.

Faia, E., and B. Weder (2016). Cross-Border Resolution of Global Banks: Bail in Under Single Point of Entry Versus Multiple Points of Entry. CEPR Discussion Paper No. DP11171.

Gopalan, Y., A. Kalda, and A. Manela (2017). Hub-and-Spoke Regulation and Bank Leverage. SSRN Paper.

Goyal, R., P. Koeva-Brooks, M. Pradhan, T. Tressel, G. Dell’Ariccia, R. Leckow, C. Pazarbasioglu, and an IMF Staff Team (2013). A banking union for the Euro area. IMF Staff Discussion Notes No 13/01.

Gros, D., and D. Schoenmaker (2012). European deposit insurance: Financing the transition. CEPS Working Document 364.

Holthausen, C., and T. Rønde (2005). Cooperation in international banking supervision. CEPR Discussion Papers 4990.

Steinkamp, S., A. Tornell, and F. Westermann (2017). The Euro Area’s Common Pool Problem Revisited: Has the Single Supervisory Mechanism Ameliorated Forbearance and Evergreening. CESifo Working Paper No. 6670.

Other articles

Allen, F., E. Carletti, and J. Gray (2013). Political, fiscal and banking union in the Eurozone? Conference at the EUI in Florence.

Allen, F., T. Beck, E. Carletti, P. R. Lane, D. Schoenmaker and W. Wagner (2011). Cross-border banking in Europe: Implications for financial stability and macroeconomic policies. www.voxeu.org.

Beck, T. (ed.) (2012). Banking union for Europe – Risks and challenges. VoxEU eBook.

Beck,T., W. Wagner, and R. Todorov (2012). Cross-border banking and national supervision – is there a conflict? www.voxeu.org.

Bremus, F., and C. Lambert (2014). Banking union and bank regulation: Banking sector stability in Europe. DIW Economic Bulletin 4(9): 29-39.

Costello, A.M., and J. Granja, and J. Weber (2015). Do strict regulators increase the transparency of the banking system? Available at SSRN: http://ssrn.com/abstract=2620853.

Forbes, K., D. Reinhardt and T. Wieladek (2016). The Spillovers, Interactions, and (Un)Intended Consequences of Monetary and Regulatory Policies. NBER Working Paper No. 22307.

Hills, R., D. Reinhardt, R. Sowerbutts and T. Wieladek (2016). Cross-border regulatory spillovers: How much? How important? What sectors? Lessons from the United Kingdom. BoE Staff Working Paper No. 595.

Ichiue, H. ; Frederic Lambert (2016). Post-crisis International Banking : An Analysis with New Regulatory Survey Data. IMF Working Paper No. 16/88.

Kahn, C. M., and J.A. Santos (2002). Allocating lending of last resort and supervision in the Euro area. Available at SSRN: http://ssrn.com/abstract=310542.

Lane, P. R. (2015). Cross-border financial linkages: Identifying and measuring vulnerabilities. www.voxeu.org.

Leitner, Y. (2014). Should regulators reveal information about banks? Business Review Q3 2014. www.philadelphiafed.org.