Cao, Y., Gregory-Smith, I. and Montagnoli, A. (2018) Transmission of Liquidity Shocks: Evidence on Cross-border Bank Ownership Linkages. Journal of International Financial Markets, Institutions and Money , 53. pp. 158-178. ISSN 1042-4431
Abstract
This study examines whether a liquidity shock to a banking system could be transmitted to other economies through a network of bank ownership. Firstly we construct cross-border ownership networks for banks located in European countries. We then exploit the 2010 European debt crisis as a natural experiment. The analysis shows that subsidiary banks located outside of Greece, Ireland, Italy, Portugal and Spain (GIIPS) but with ownership linkages to these countries have a lower loan growth rate during the crisis period. This suggests that the liquidity shock experienced by GIIPS countries was indeed transmitted to those banks through ownership linkages. Larger subsidiary banks and those subsidiaries that were more profitable are found to be more resilient to the shock. We also find that the parent bank’s characteristics affect the transmission of the shock, supporting the notion of an internal capital market operating within these banks.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2017 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/) |
Keywords: | Foreign Banks; Liquidity Crisis; Crisis Transmission; Bank Lending |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 06 Oct 2017 13:30 |
Last Modified: | 23 Jan 2020 08:29 |
Published Version: | https://doi.org/10.1016/j.intfin.2017.09.017 |
Status: | Published |
Publisher: | Elsevier |
Refereed: | Yes |
Identification Number: | 10.1016/j.intfin.2017.09.017 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:121965 |