Essays on foreign banking and international shock transmission.

다국어 초록 (Multilingual Abstract)

Foreign banking has grown considerably over the past two decades, as has interest in its costs and benefits by academics and policymakers alike. The flow of bank capital and liquidity across borders can transmit a domestic shock globally or mitigate the effects a domestic shock. In this dissertation, I contribute to the literature on the costs and benefits of foreign banking in three chapters.
In the first chapter, I analyze the responses of banks in the United States to a funding shock generated by the 2011 FDIC assessment base change. Following the shock, insured banks found wholesale funding more costly, while uninsured branches of foreign banks enjoyed cheaper access to these funding sources. Using quarterly bank balance sheet statements and hand-matched borrowers and lenders from a syndicated loan-level database, we create a novel dataset with rich borrower and lender data. Uninsured banks which faced a relatively positive shock accumulated more reserves, but extended fewer loans and became more passive in the syndicated loan deals in which they participated. This contradicts much of the literature on internal capital markets of banks which find that foreign banks can insulate an economy from a domestic shock by extending loans.
The second chapter addresses the issue of inadequate bank-level data capturing global foreign banking exposures. Despite the rising importance and growing interest in global foreign banking, comprehensive bank-level datasets measuring cross-border banking remain elusive. I construct a novel dataset covering foreign-owned banks between the United States and the European Union, Latin America, and Japan. My dataset contains detailed balance sheet information for individual depository institutions operating abroad. I compare the coverage of my dataset to that of an existing global foreign bank ownership database to show that my dataset improves in its coverage of pertinent foreign banks. I discuss some trends in foreign banking by U.S.-owned banks in Europe, Latin America, and Japan and banks operating in the U.S. owned by institutions in these regions.
The third chapter analyzes the dataset compiled in chapter 2 as well as a complementary aggregate country-level dataset in order to examine foreign banking trends. Specifically, these datasets inform several stylized facts regarding the drivers between foreign banking between the United States and three regions: Europe, Latin America, and Japan. This level of data is necessary to distinguish between three main types of foreign banking: direct cross-border lending, the establishment or acquisition of foreign subsidiary banks, and the establishment of foreign branches.