Euro Area (Cross-Border?) Banking

Competitive Implications of Cross-Border Banking

Cross-border banking has long been an important part of the trend towards increased globalization and financial integration. In terms of this paper, cross-border banking refers to both cross-border capital flows as well crossborder entry in banking. Cross-border capital flows have been for long important drivers of financial integration. Particularly in the form of crossborder entry, cross-bord...

Cross-Border Banking and Global Liquidity

We investigate global factors associated with bank capital ‡ows. We formulate a model of the international banking system where global banks interact with local banks. The solution highlights the bank leverage cycle as the determinant of the transmission of …nancial conditions across borders through banking sector capital ‡ows. A distinctive prediction of the model is that local currency apprec...

Directorate General for Research Working Paper Improving Cross-border Payments in the Euro Area

Cross-border banking in regulated markets: Is financial integration desirable?

We set up a two-country, regional model of trade in financial services. Competitive firms in each country manufacture untraded consumer goods in an uncertain productive environment, borrowing funds from a bank in either the home or the foreign market. Duopolistic banks can choose their levels of monitoring of firms and thus the levels of risk-taking, where the risk of bank failure is partly bor...

Information Sharing and Cross-border Entry in European Banking

Information asymmetries can severely limit cross-border border expansion of banks. When a bank enters a new market, it has incomplete information about potential new clients. Such asymmetries are reduced by credit registers, which distribute financial data on bank clients. We investigate the interaction of credit registers and bank entry modes (in form of branching and M&A) by using a new set o...