Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/179345
Authors: 
Emter, Lorenz
Tirpák, Marcel
Schmitz, Martin
Year of Publication: 
2018
Series/Report no.: 
ECB Working Paper 2130
Abstract: 
This paper examines the drivers of the retrenchment in cross-border banking in the European Union (EU) since the global financial crisis, which stands out in international comparison as banks located in the euro area and in the rest of the EU reduced their cross-border claims by around 25%. Particularly striking is the sharp and sustained reduction in intra-EU claims, especially in the form of deleveraging from cross-border interbank loans. Examining a wide range of possible determinants, we identify high non-performing loans as an important impediment to cross-border lending after the crisis, highlighting the spillovers from national banking sector conditions across the EU. We also find evidence that prudential policies can entail spillovers via cross-border banking in the EU, albeit with heterogeneity across instruments in terms of direction, magnitude and significance. Our results do not point to a major role of newly introduced bank levies in explaining cross-border banking developments.
Subjects: 
cross-border banking
international capital flows
deleveraging
financial integration
prudential policies
regulation
bank levy
JEL: 
F21
F30
F42
G15
G28
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-3235-6
Document Type: 
Working Paper

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