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Title: Multinational Banks and Supranational Supervision

Author(s): Giacomo Calzolari, Jean-Edouard Colliard and Gyöngyi Lóránth

Publication Date: June 2016

Keyword(s): Banking Union, Cross-border banks, Monitoring, Multinational banks, regulation and Supervision

Programme Area(s): Financial Economics

Abstract: We study the supervision of multinational banks (MNBs), allowing for either national or supranational supervision. National supervision leads to insu?cient monitoring of MNBs due to a coordination problem between supervisors. Supranational supervision can solve this problem and increase monitoring. However, this change has the unintended consequence of a?ecting the MNB?s choice of foreign representation. MNBs may expand abroad using branches rather than subsidiaries, or abandon foreign expansion altogether. These changes completely neutralize the more intense monitoring that would otherwise occur with supranational supervision. Our paper provides insight into how the national boundaries of bank supervision interact with multinational banks.

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Bibliographic Reference

Calzolari, G, Colliard, J and Lóránth, G. 2016. 'Multinational Banks and Supranational Supervision'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=11326