The Resilience of Banks' International Operations
14 Pages Posted: 9 Mar 2016
Date Written: March 6, 2016
This feature explores the resilience of banks' balance sheets after the 2008-09 financial crisis through the lens of a unique global data set crossing bank nationality and host country. We start by documenting post-crisis changes in the structure of BIS reporting banks' global operations across bank nationalities. We then zero in on the funding mix of banks' foreign affiliates (branches and subsidiaries) on the eve of the crisis, and how it helps explain the subsequent contraction of credit. We find that local claims backed by local funding made balance sheets more resilient, even after accounting for systematic differences between host countries and banking systems. By contrast, affiliates shrank more sharply if they had relied pre-crisis on non-core sources of funding, in the form of interbank, foreign currency and cross-border funding.
JEL Classification: F34, G01, G21
Suggested Citation: Suggested Citation