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Internal capital market practices of multinational banks evidence from South Africa

Pelletier, Adeline (2018) Internal capital market practices of multinational banks evidence from South Africa. Journal of Banking and Finance, 90. pp. 131-145. ISSN 0378-4266

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Identification Number: 10.1016/j.jbankfin.2018.03.008

Abstract

This paper examines how internal capital flows inside multinational banks create global financial interconnections, relying on a novel database on foreign banks operating in South Africa. Using the event of the East Asian crisis, I find that foreign affiliates’ balance sheet face “reversal of fortune” when other members of their banking group need large amounts of internal capital to cushion capital losses, leading to an abrupt reallocation of internal capital across countries. At the same time, an increase of the volume of internal funding received is shown to cause an expansion of credit to the local private sector.

Item Type: Article
Official URL: https://www.journals.elsevier.com/journal-of-banki...
Additional Information: © 2018 Elsevier B.V.
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HG Finance
JEL classification: E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 18 Apr 2018 14:56
Last Modified: 23 Jan 2019 20:51
URI: http://eprints.lse.ac.uk/id/eprint/87528

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