TY - BOOK ID - 139067724 TI - Foreign Bank Subsidiaries’ Default Risk during the Global Crisis : What Factors Help Insulate Affiliates from their Parents? AU - Anginer, Deniz. AU - Cerutti, Eugenio. AU - Martinez Peria, Maria. PY - 2016 SN - 1475535414 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Banks and banking, Foreign. KW - Bank failures. KW - Risk management. KW - Bank regulation KW - Bank supervision KW - Banking KW - Banks and Banking KW - Banks and banking KW - Banks and banking, Foreign KW - Banks KW - Debt default KW - Debts, External KW - Depository Institutions KW - Exports and Imports KW - External debt KW - Finance KW - Finance: General KW - Financial Aspects of Economic Integration KW - Financial Institutions and Services: Government Policy and Regulation KW - Financial institutions KW - Financial markets KW - Financial regulation and supervision KW - Financial services law & regulation KW - Foreign banks KW - General Financial Markets: General (includes Measurement and Data) KW - International economics KW - International Financial Markets KW - International Lending and Debt Problems KW - Investment Decisions KW - Micro Finance Institutions KW - Mortgages KW - Portfolio Choice KW - State supervision KW - Stock exchanges KW - Stock markets KW - United Kingdom UR - https://www.unicat.be/uniCat?func=search&query=sysid:139067724 AB - This paper examines the association between the default risk of foreign bank subsidiaries in developing countries and their parents during the global financial crisis, with the purpose of determining the size and sign of this correlation and, more importantly, understanding what factors can help insulate affiliates from their parents. We find evidence of a significant and robust positive correlation between parent banks’ and foreign subsidiaries’ default risk. This correlation is lower for subsidiaries that have a higher share of retail deposit funding and that are more independently managed from their parents. Host country bank regulations also influence the extent to which shocks to the parents affect the subsidiaries’ default risk. In particular, the correlation between the default risk of subsidiaries and their parents is lower for subsidiaries operating in countries that impose higher capital, reserve, provisioning, and disclosure requirements, and tougher restrictions on bank activities. ER -