Bank Lending, Bank Capital Regulation and Efficiency of Corporate Foreign Investment

Arbeitspapier

In this paper we study interdependencies between corporate foreign investment and the capital structure of banks. By committing to invest predominantly at home, firms can reduce the credit default risk of their lending banks. Therefore, banks can refinance loans to a larger extent through deposits thereby reducing firms' effective financing costs. Firms thus have an incentive to allocate resources inefficiently as they then save on financing costs. We argue that imposing minimum capital adequacy for banks can eliminate this incentive by putting a lower bound on financing costs. However, the Basel II framework is shown to miss this potential.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: IWH Discussion Papers ; No. 4/2007

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Multinational Firms; International Business ; Financial Institutions and Services: Government Policy and Regulation
• Thema: financial contracting ; multinational corporations ; internal capital markets ; Direktinvestition ; Kapitalkosten ; Bank ; Kapitalstruktur ; Eigenkapitalvorschriften ; Theorie

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Dietrich, Diemo ; Hauck, Achim
• Ereignis: Veröffentlichung
• (wer): Leibniz-Institut für Wirtschaftsforschung Halle (IWH)
• (wo): Halle (Saale)
• (wann): 2007

Weitere Informationen

• Handle: http://hdl.handle.net/10419/29995
• URN: urn:nbn:de:gbv:3:2-373
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ