Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/172915
Authors: 
Frame, W. Scott
Mihov, Atanas
Sanz, Leandro
Year of Publication: 
2017
Series/Report no.: 
Working Paper No. 2017-2
Abstract: 
This study investigates the implications of cross-country differences in banking regulation and supervision for the international subsidiary locations and risk of U.S. bank holding companies (BHCs). We find that U.S. BHCs are more likely to operate subsidiaries in countries with weaker regulation and supervision and that such location decisions are associated with elevated BHC risk and higher contribution to systemic risk. The quality of BHCs' internal controls and risk management play an important role in these location choices and risk outcomes. Overall, our study suggests that U.S. banking organizations engage in cross-country regulatory arbitrage with potentially adverse consequences.
Subjects: 
regulation
supervision
bank holding companies
cross-border operations
subsidiary locations
risk
systemic risk
JEL: 
G15
G21
G28
Document Type: 
Working Paper

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