Research on Cross-Border Banking
The financial crisis has revealed the urgent need to better understand the determinants and consequences of cross-border banking. Banks’ decision to internationalize can be determined by entry barriers, geographical distance or growth prospects. The entry of foreign banks into domestic markets can bring along benefits and costs for the host country. While efficiency of the host country’s banking market can be improved through the entry of foreign banks, cross-border activities can transmit shocks. This reveals the necessity of supranational regulation and supervision. For an appropriate design of (inter)national regulation and supervision, it is important to understand how banks are connected within and across borders. Along these lines, we provide information on relevant literature, main research questions and findings for each of the following topics.
Data on International Banking
In the last decades the internationalization of banks has increased. However, internationally active banks can be a source of systemic risk. The appearance of the financial crisis revealed the need to better understand determinants and consequences of the internationalization of banks. Thus, this section is intended to give a general overview of different databases that can be used for further research on this topic. The databases are divided into several sub-groups that refer to different research questions. The IMF offers free access to its online economic data including the International Financial Statistics (IFS) and the Balance of Payments Statistics (BOP/IIP).
Banking networks have expanded across national borders establishing potential linkages of international risk spillovers. The increased perception of this development led to the formation of research initiatives with the aim to provide insights on this matter and to connect researchers interested in this field. Policy initiatives have been established to manage policy instruments handling the increasing risk potential of internationally active banks. The “InterConnectedness Newsletter” provides news and information on recent developments regarding research on financial networks. It also lists events, such as meetings, workshops and conferences on the subject and presents novelties concerning the scientific community and research networks.
The financial crisis has revealed the urgent need to better understand the determinants and consequences of cross-border banking. The section “teaching” presents therefore selected teaching material and textbooks on the topics financial crises, money, banking and finance, microeconometrics of banking, empirical research on financial markets and institutions and governance of international banking.