TY  - BOOK
AU  - Anginer,Deniz
AU  - Anginer,Deniz
AU  - Cerutti,Eugenio
AU  - Peria,Maria Soledad Martinez
TI  - Foreign Bank Subsidiaries' Default Risk During the Global Crisis: What Factors Help Insulate Affiliates from Their Parents? 
PY  - 2014///
CY  - Washington, D.C.
PB  - The World Bank
KW  - Access to Finance
KW  - Bank Subsidiaries
KW  - Banking Crises
KW  - Bankruptcy and Resolution of Financial Distress
KW  - Banks and Banking Reform
KW  - Corporate Law
KW  - Debt Markets
KW  - Default Risk
KW  - Distance to Default
KW  - Finance and Financial Sector Development
KW  - Law and Development
KW  - Merton Model
KW  - Ring-Fencing
N2  - This 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
UR  - http://elibrary.worldbank.org/content/workingpaper/10.1596/1813-9450-7053
ER  -