Financial integration, specialization, and systemic risk

• 成果类型: Article
• 署名作者: Fecht, Falko; Gruener, Hans Peter; Hartmann, Philipp
• 署名单位: University of Mannheim; European Business School (EBS) University; European Central Bank; Centre for Economic Policy Research - UK; Erasmus University Rotterdam; Erasmus University Rotterdam - Excl Erasmus MC
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2012.01.012
• 发表日期: 2012
• 页码: 150-161
• 关键词: financial integration; specialization; interbank market; Financial contagion

摘要

This paper studies the implications of cross-border financial integration for financial stability when banks' loan portfolios adjust endogenously. Banks can be subject to sectoral and aggregate domestic shocks. After integration they can share these risks in a complete interbank market When banks have a comparative advantage in providing credit to certain industries, financial integration may induce banks to specialize in lending. An enhanced concentration in lending does not necessarily increase risk, because a well-functioning interbank market allows to achieve the necessary diversification. This greater need for risk sharing, though, increases the risk of cross-border contagion and the likelihood of widespread banking crises. However, even though integration increases the risk of contagion it improves welfare if it permits banks to realize specialization benefits. (c) 2012 Elsevier B.V. All rights reserved.