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A bank's interest expenses rise with its degree of internationalization, measured by its share of foreign liabilities in total liabilities or a Herfindahl index of international liability concentration, especially if the bank is performing badly. The results in this paper suggest that an international bank's cost of funds raised through a foreign subsidiary is 1.5-2.4 percent higher than the cost of funds for a purely domestic bank. That is a sizeable difference, given that the overall mean cost of funds is 3.3 percent. These results can be explained by limited incentives for national authorities to bail out an international bank, as well as an inefficient recovery and resolution process for international banks. In any event, a less reliable financial safety net appears to be a barrier to cross-border banking.

Access to Finance --- Bank bailouts --- Banks & Banking Reform --- Cross-border banking --- Debt Markets --- Economic Theory & Research --- Emerging Markets --- Finance and Financial Sector Development --- International burden sharing --- Private Sector Development

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A bank's interest expenses rise with its degree of internationalization, measured by its share of foreign liabilities in total liabilities or a Herfindahl index of international liability concentration, especially if the bank is performing badly. The results in this paper suggest that an international bank's cost of funds raised through a foreign subsidiary is 1.5-2.4 percent higher than the cost of funds for a purely domestic bank. That is a sizeable difference, given that the overall mean cost of funds is 3.3 percent. These results can be explained by limited incentives for national authorities to bail out an international bank, as well as an inefficient recovery and resolution process for international banks. In any event, a less reliable financial safety net appears to be a barrier to cross-border banking.

Access to Finance --- Bank bailouts --- Banks & Banking Reform --- Cross-border banking --- Debt Markets --- Economic Theory & Research --- Emerging Markets --- Finance and Financial Sector Development --- International burden sharing --- Private Sector Development

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Pan-African banks are expanding rapidly across the continent, creating cross-border networks, and having a systemic presence in the banking sectors of many Sub-Saharan African countries. These banking groups are fostering financial development and economic integration, stimulating competition and efficiency, introducing product innovation and modern management and information systems, and bringing higher skills and expertise to host countries. At the same time, the rise of pan-African banks presents new challenges for regulators and supervisors. As networks expand, new channels for transmission of macro-financial risks and spillovers across home and host countries may emerge. To ensure that the gains from cross border banking are sustained and avoid raising financial stability risks, enhanced cross-border cooperation on regulatory and supervisory oversight is needed, in particular to support effective supervision on a consolidated basis. This paper takes stock of the development of pan-African banking groups; identifies regulatory, supervisory and resolution gaps; and suggests how the IMF can help the authorities address the related challenges.

Banks and Banking --- Finance: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- General Financial Markets: Government Policy and Regulation --- International Lending and Debt Problems --- Banking --- Financial services law & regulation --- Finance --- Foreign banks --- Cross-border banking --- Basel II --- Financial sector stability --- Financial institutions --- Financial services --- Financial sector policy and analysis --- Commercial banks --- Financial regulation and supervision --- Banks and banking --- Banks and banking, Foreign --- International finance --- State supervision --- Financial services industry --- Nigeria

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We examine the composition and drivers of cross-border bank lending between 1995 and 2012, distinguishing between syndicated and non-syndicated loans. We show that on-balance sheet syndicated loan exposures account for almost one third of total cross-border loan exposures during this period. Furthermore, syndicated loan exposures increased during the global financial crisis due to large drawdowns on credit lines extended before the crisis. Our empirical analysis of the drivers of cross-border loan exposures in a large bilateral dataset shows three main results. First, banks with lower levels of capital favor syndicated over other kinds of cross-border loans. Second, borrower country characteristics such as level of development, economic size, and capital account openness, are less important in driving syndicated than non-syndicated loan activity, suggesting a diversification motive for syndication. Third, information asymmetries between lender and borrower countries, which are important both in normal and crisis times, became more binding for both types of cross-border lending activity during the recent crisis.

Banks and Banking --- Money and Monetary Policy --- Industries: Financial Services --- International Finance: General --- Globalization: Finance --- International Financial Markets --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- International Lending and Debt Problems --- Finance --- Banking --- Monetary economics --- Syndicated loans --- Loans --- Bank credit --- Lines of credit --- Financial institutions --- Money --- Cross-border banking --- Financial services --- Banks and banking --- Credit --- International finance --- United States

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The recent crisis has spurred the use of stress tests as a (crisis) management and early warning tool. However, a weakness is that they omit potential risks embedded in the banking groups’ geographical structures by assuming that capital and liquidity are available wherever they are needed within the group. This assumption neglects the fact that regulations differ across countries (e.g., minimum capital requirements), and, more importantly, that home/host regulators might limit flows of capital or liquidity within a group during periods of stress. This study presents a framework on how to integrate this risk element into stress tests, and provides illustrative calculations on the size of the potential adjustments needed in the presence of some limits on intragroup flows for banks included in the June 2011 EBA stress tests.

Finance --- Business & Economics --- International Finance --- Banks and banking, International --- Banks and banking --- Risk management --- Econometric models. --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- International banking --- Offshore banking (Finance) --- Transnational banking --- Financial institutions --- Money --- Financial institutions, International --- International finance --- Banks and Banking --- Finance: General --- International Lending and Debt Problems --- Financial Aspects of Economic Integration --- International Financial Markets --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Institutions and Services: Government Policy and Regulation --- Financial services law & regulation --- Stress testing --- Countercyclical capital buffers --- Foreign banks --- Financial sector policy and analysis --- Financial regulation and supervision --- Capital adequacy requirements --- Cross-border banking --- Financial services --- Financial risk management --- Asset requirements --- Banks and banking, Foreign --- Czech Republic