Arbeitspapier
Voluntary support and ring-fencing in cross-border banks
We study supervisory interventions in cross-border banks under different institutional architectures in a model in which a bank may provide voluntary support to an impaired subsidiary using resources from a healthy subsidiary. While supranational architecture permits voluntary support, national architecture gives rise to inefficient ring-fencing of a healthy subsidiary when there is high correlation between the subsidiaries' assets. The enhanced cross-subsidiary support allowed by a supranational architecture affects banks' risk-taking, leading to a convergence of the default risk among cross-border banks with heterogeneous fundamentals. Finally, supranational architecture reduces the expected deposit insurance costs for banks with riskier fundamentals, but not for safer banks even when it could still be aggregate welfare improving.
- ISBN
-
978-92-899-5272-9
- Sprache
-
Englisch
- Erschienen in
-
Series: ECB Working Paper ; No. 2688
- Klassifikation
-
Wirtschaft
Portfolio Choice; Investment Decisions
- Thema
-
cross-border bank
supervisory intervention
supranational supervision
voluntarysupport
ring-fencing
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Lóránth, Gyöngyi
Segura, Anatoli
Zeng, Jing
- Ereignis
-
Veröffentlichung
- (wer)
-
European Central Bank (ECB)
- (wo)
-
Frankfurt a. M.
- (wann)
-
2022
- DOI
-
doi:10.2866/05325
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Lóránth, Gyöngyi
- Segura, Anatoli
- Zeng, Jing
- European Central Bank (ECB)
Entstanden
- 2022
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