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Title:Banking sectors' international interconnectedness: Implications for consumption risk sharing in Europe PDF Logo
Authors:Nitschka, Thomas
Issue Date:2011
Series/Report no.:Beiträge zur Jahrestagung des Vereins für Socialpolitik 2011: Die Ordnung der Weltwirtschaft: Lektionen aus der Krise - Session: Financial Integration G6-V1
Abstract:Cross-border asset and liability holdings allow countries to insulate their consumption streams from idiosyncratic output shocks, i.e. consumption risk sharing. More cross-border asset holdings are associated with more risk sharing. By contrast, a bank’s interconnectedness is regarded as an indicator of its exposure to systemic risk. International interbank asset holdings could hence positively or negatively affect international consumption risk sharing. This paper provides evidence in favour of the latter hypothesis. A country’s ability to achieve consumption risk sharing decreases if banks located in that country are strongly linked to other countries’ banks.
Subjects:banking sector
cross-border assets
consumption risk sharing
interconnectedness
systemic risk
JEL:G20
F15
E44
Document Type:Conference Paper
Appears in Collections:Jahrestagung des Vereins für Socialpolitik 2011: Die Ordnung der Weltwirtschaft - Lektionen aus der Krise

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