G2TT
来源类型Discussion paper
规范类型论文
来源IDDP6292
DP6292 Foreign Firms, Domestic Wages
James Markusen; Nikolaj Malchow-Møller; Bertel Schjerning
发表日期2007-05-18
出版年2007
语种英语
摘要This paper compares four forms of inter-regional financial risk sharing: (i) segmentation, (ii) integration trough the secured interbank market, (ii) integration trough the unsecured interbank market, (iv) integration of retail markets. The secured interbank market is an optimal risk-sharing device when banks report liquidity needs truthfully. It allows diversification without the risk of cross-regional financial contagion. However, free-riding on the liquidity provision in this market restrains the achievable risk-sharing as the number of integrated regions increases. In too large an area this moral hazard problem becomes so severe that either unsecured interbank lending or, ultimately, the penetration of retail markets is preferable. Even though this deeper financial integration entails the risk of contagion it may be beneficial for large economic areas, because it can implement an efficient sharing of idiosyncratic regional shocks. Therefore, the enlargement of a monetary union, for example, extending the common interbank market might increase the benefits of also integrating retail banking markets through cross-border transactions or bank mergers. We discuss these results in the context of the ongoing debate on European financial integration and the removal of bank branching restrictions in the United States during the 1990s, and we derive implications for the relationship between financial integration and financial stability. Last we illustrate the scope for cross-regional risk sharing with data on non-performing loans for the European Union, Switzerland and the United States.
主题Financial Economics
关键词Financial integration Interbank market Cross border lending Financial contagion
URLhttps://cepr.org/publications/dp6292
来源智库Centre for Economic Policy Research (United Kingdom)
资源类型智库出版物
条目标识符http://119.78.100.153/handle/2XGU8XDN/535132
推荐引用方式
GB/T 7714
James Markusen,Nikolaj Malchow-Møller,Bertel Schjerning. DP6292 Foreign Firms, Domestic Wages. 2007.
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