Anginer, DenizCerutti, EugenioMartinez Peria, Maria Soledad2014-11-122014-11-122014-10https://hdl.handle.net/10986/20517This paper examines the association between the default risk of foreign bank subsidiaries and their parents during the global financial crisis, with the purpose of understanding what factors can help insulate affiliates from their parents. The paper finds evidence of a significant positive correlation between parent banks' and foreign subsidiaries' default risk. This correlation is lower for subsidiaries that have higher capital, retail deposit funding, and profitability ratios and that are more independently managed from their parents. Host country 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 the subsidiary and the parent is lower for subsidiaries operating in countries that impose higher capital, reserve, provisioning, and disclosure requirements and tougher restrictions on bank activities.en-USCC BY 3.0 IGOACCOUNTINGACQUISITIONAFFILIATEAFFILIATESALLOCATION OF CAPITALALTERNATIVE INVESTMENTSAMOUNT OF CAPITALARREARSASSET DIVERSIFICATIONASSET QUALITYASSET VALUEASSET VALUESASSETS RATIOBALANCE SHEETBANK ACCOUNTSBANK BALANCE SHEETSBANK COMPETITIONBANK HOLDINGBANK HOLDING COMPANYBANK LENDINGBANK LIQUIDITYBANK LOANSBANK OF BOTSWANABANK OF GREECEBANK POLICYBANK REGULATIONBANK REGULATIONSBANK SUPERVISIONBANKING CORPORATIONBANKING CRISESBANKING REGULATIONSBANKING SUPERVISIONBANKING SYSTEMSBANKRUPTCYBANKSBOARD MEMBERSBOOK VALUEBOOK VALUESCALL OPTIONCAPITAL ADEQUACYCAPITAL REGULATIONCAPITAL REQUIREMENTSCAPITALSCHARTERCHECKSCOLLATERALCOMMERCIAL BANKCONSOLIDATED FINANCIAL STATEMENTSCORPORATE DEBTCORRECTIVE ACTIONCORRECTIVE ACTIONSCREDIT BANKCREDIT MARKETSCREDIT RATIONINGCREDIT RISKCREDIT SPREADCROSS-BORDER BANKINGDEBTDEFAULT PROBABILITIESDEFAULT PROBABILITYDEFAULT RISKDEFAULT RISKSDEFAULTSDEPOSITDEPOSIT INSURANCEDEPOSITSDERIVATIVE PRODUCTSDERIVATIVESDEVELOPING COUNTRIESDEVELOPMENT BANKDISCLOSURE REQUIREMENTSDIVIDENDDOMESTIC BANKDUMMY VARIABLEDUMMY VARIABLESEARNINGSECONOMIC SHOCKSECONOMIES OF SCALEEMERGING MARKETEQUITY HOLDERSEQUITY RATIOEQUITY RETURNSEQUITY VALUEESTATEEVENT OF DEFAULTFACE VALUEFACE VALUE OF DEBTFEDERAL RESERVEFINANCIAL CONTRACTSFINANCIAL CRISISFINANCIAL HEALTHFINANCIAL INTERMEDIATIONFINANCIAL SERVICESFINANCIAL STABILITYFINANCIAL STUDIESFOREIGN BANKFOREIGN BANK PARTICIPATIONFOREIGN BANKSHOLDINGHOLDING COMPANIESHOLDINGSHOST COUNTRIESHOST COUNTRYIMPLIED VOLATILITIESIMPLIED VOLATILITYINCOME STATEMENTINDEPENDENT BANKSINSOLVENCYINSURANCEINTEREST RATEINTEREST RATE DATAINTEREST RATE SPREADINTEREST RATESINTERNATIONAL BANKINTERNATIONAL BANK LENDINGINTERNATIONAL BANKINGINTERNATIONAL BANKSINTERNATIONAL FINANCIAL SYSTEMINTERPOLATIONINVESTMENT REGULATIONSISLAMIC BANKJURISDICTIONSLARGE BANKSLEGAL ENTITIESLEVERAGELIMITEDLIQUID ASSETSLIQUIDITY RISKLOANLOAN CLASSIFICATIONLOAN LOSSLOAN LOSS PROVISIONSLTD.MARKET EQUITYMARKET INFORMATIONMARKET VALUEMARKET VALUE OF EQUITYMONETARY FUNDMULTINATIONALMULTINATIONAL BANKMULTINATIONAL BANKSMUTUAL FUNDMUTUAL FUND INDUSTRYNONPERFORMING LOANSPOLITICAL ECONOMYPROBABILITY OF BANKRUPTCYPROBABILITY OF DEFAULTPROFITABILITYPROXYPUBLIC BANKSREAL ESTATERECESSIONSREGULATORY AUTHORITIESREGULATORY REGIMEREGULATORY REGIMESREGULATORY SYSTEMRESERVERESERVE REQUIREMENTRESERVE REQUIREMENTSRESERVESRESTRICTIONS ON BANK ACTIVITIESRETURNRISK CONTROLRISK PROFILESRISK WEIGHTED ASSETSRISK-FREE RATESECURITIESSHARE OF BANK ASSETSSOCIAL DEVELOPMENTSOLVENCYSTOCK MARKETSTOCK MARKET PRICESSTOCK MARKETSSTOCK RETURNSUBSIDIARIESSUBSIDIARYSUPERVISION OF BANKSSUPERVISORY AUTHORITIESSUPERVISORY POWERSSYSTEM ASSETSSYSTEMIC RISKTREASURYTREASURY YIELDUNIONUSE OF DERIVATIVEVALUE OF ASSETSWHOLESALE FUNDING10.1596/1813-9450-7053