Foreign expansion, competition and bank risk

• 成果类型: Article; Proceedings Paper
• 署名作者: Faia, Ester; Laffitte, Sebastien; Ottaviano, Gianmarco I. P.
• 署名单位: Goethe University Frankfurt; Centre for Economic Policy Research - UK; Universite Paris Saclay; Institut Polytechnique de Paris; ENSAE Paris; University of London; London School Economics & Political Science; Bocconi University
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2019.01.013
• 发表日期: 2019
• 页码: 179-199
• 关键词: Banks' risk-taking; Systemic risk; Geographical expansion; gravity; diversification; COMPETITION; Regulatory arbitrage

摘要

Using a novel dataset on the 15 European banks classified as G-SIBs from 2005 to 2014, we find that the impact of foreign expansion on risk is always negative and significant for most individual and systemic risk metrics. In the case of individual metrics, we also find that foreign expansion affects risk through a competition channel as the estimated impact of openings differs between host countries that are more or less competitive than the source country. The systemic risk metrics also decline with respect to expansion, though results for the competition channel are more mixed, suggesting that systemic risk is more likely to be affected by country or business models characteristics that go beyond and above the differential intensity of competition between source and host markets. Empirical results can be rationalized through a simple model with oligopolistic/oligopsonistic banks and endogenous assets/liabilities risk. (C) 2019 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).