Download This PaperEuropean Banks Straddling Borders: Risky or Rewarding?
Forthcoming in Financial Research Letters
18 Pages Posted: 18 Jul 2017 Last revised: 4 Jun 2020
There are 2 versions of this paper
European Banks Straddling Borders: Risky or Rewarding?
European Banks Straddling Borders: Risky or Rewarding?
Date Written: May 20, 2020
Abstract
The establishment of the European Banking Union in 2014 created a large banking market in Europe, making it easier for banks to straddle borders and expand their business to other European countries. We use a unique hand-collected dataset with cross-border loans for the 61 largest European banks to study the impact cross-border banking has on the risk-return profile of an individual bank. Our results show that cross-border banking decreases banks’ risk, by lowering the insolvency risk and generating a more stable income profile.
Keywords: International Banking; Bank Regulation; Financial Stability; Risk; Geographical diversification
JEL Classification: E44, G21, G28
Suggested Citation: Suggested Citation
