Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/154000
Authors: 
Degryse, Hans
Elahi, Muhammad Ather
Penas, María Fabiana
Year of Publication: 
2013
Series/Report no.: 
ECB Working Paper 1567
Abstract: 
We study the role of regional banking system characteristics for regional banking system fragility in Asia, Europe, Latin America and the US. We find that regional banking system fragility reduces when banks in the region jointly hold more liquid assets, are better capitalized, and when regional banking systems are more competitive. For Asia and Latin-America, a greater presence of foreign banks and more wholesale funded banks also reduces regional banking fragility. In contrast, regional banking fragility increases in foreign bank presence and wholesale funding in the US. We further investigate the possibility of contagion across regions. We find that the contagion effects of Europe and the US on Asia and Latin America are significantly higher compared to the effect of Asia and Latin America among themselves. Finally, the impact of cross-regional contagion is attenuated when the host region has a more liquid and more capitalized banking sector.
Subjects: 
Banking system stability
cross-regional contagion
financial integration
JEL: 
G15
G20
G29
Document Type: 
Working Paper

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