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Voluntary Support and Ring-fencing in Multinational Banks

Gyöngyi LóránthAnatoli SeguraJing Zeng

出版	Centre for Economic Policy Research, 2022
URL	http://books.google.com.hk/books?id=Lw7rzgEACAAJ&hl=&source=gbs_api

註釋

We study supervisory interventions in a multinational bank under different institutional architectures in a model in which the bank may provide voluntary support to an impaired unit using a healthy unit's resources. While a supranational architecture permits voluntary support, a national architecture gives rise to ring-fencing of the healthy unit for high correlation between the units' assets. Ring-fencing limits voluntary support and may lead to inefficient liquidation of an impaired unit, but may incentivize bank effort and reduce risks in the units. We show that establishing a supranational architecture reduces the expected deposit insurance costs for weaker banks with highly correlated assets. Finally, conflicting national interests can hinder the establishment of a welfare-improving supranational architecture for stronger banks.