Pub Date : 2025-03-01DOI: 10.1016/j.mulfin.2025.100900
Anis Samet , Kimberly C. Gleason , Feras M. Salama , Xi Ye
This study is the first to comprehensively investigates the stock market repercussions of the SVB collapse for a sample of 528 individual bank stocks across 35 countries. Using event-study methodology, we find that the resilience of banks during the SVB collapse is intricately linked to their capital adequacy and liquidity. Specifically, banks exhibiting higher capital adequacy and greater liquidity mitigate losses during the SVB collapse, while controlling for bank-level and country-level variables. Further, we find that emerging markets banks exhibited significantly lower stock price declines upon announcement of the SVB failure than their counterparts in developed countries, indicating higher resilience to crisis for banks in emerging markets. This study offers a further understanding of the importance of capital adequacy and liquidity in shaping banks’ resilience to banking sector crises, such as the SVB collapse, and provides implications for policymakers seeking to enact policies designed to reduce bank vulnerability to external shocks.
{"title":"How did banks react to SVB collapse?","authors":"Anis Samet , Kimberly C. Gleason , Feras M. Salama , Xi Ye","doi":"10.1016/j.mulfin.2025.100900","DOIUrl":"10.1016/j.mulfin.2025.100900","url":null,"abstract":"<div><div>This study is the first to comprehensively investigates the stock market repercussions of the SVB collapse for a sample of 528 individual bank stocks across 35 countries. Using event-study methodology, we find that the resilience of banks during the SVB collapse is intricately linked to their capital adequacy and liquidity. Specifically, banks exhibiting higher capital adequacy and greater liquidity mitigate losses during the SVB collapse, while controlling for bank-level and country-level variables. Further, we find that emerging markets banks exhibited significantly lower stock price declines upon announcement of the SVB failure than their counterparts in developed countries, indicating higher resilience to crisis for banks in emerging markets. This study offers a further understanding of the importance of capital adequacy and liquidity in shaping banks’ resilience to banking sector crises, such as the SVB collapse, and provides implications for policymakers seeking to enact policies designed to reduce bank vulnerability to external shocks.</div></div>","PeriodicalId":47268,"journal":{"name":"Journal of Multinational Financial Management","volume":"78 ","pages":"Article 100900"},"PeriodicalIF":2.9,"publicationDate":"2025-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143551489","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-31DOI: 10.1016/j.mulfin.2025.100899
Sunny Kumar Singh , Salva
This paper examines the association between financial stability and financial globalization for 59 emerging markets and developing countries (EMDEs) from 2000 to 2019. Our findings from the baseline model reveal that the relationship between financial stability and financial globalization varies, depending on dimensions of financial globalization (overall, de facto, de jure) and financial stability. The relationship shows nonlinear and heterogeneous patterns across quantiles of financial stability, characterized by well-defined extreme points within the data range. Specifically, by employing panel quantile regression technique, we find that financially unstable countries (lower quantiles of financial stability) exhibit a U-shaped relationship between dimensions of financial globalization and financial stability. In comparison, an inverted U-shaped relationship appears for financially stable countries. Further, we find that countries with weak institutional and financial development exhibit U-shaped relations, experiencing initial instability followed by stability. Conversely, financial stability initially improves for countries with strong institutional and financial development but declines as integration deepens. These findings underscore the importance of strengthening institutions to harness the benefits of financial globalization while mitigating associated risks.
{"title":"Is the relationship between financial globalization and financial stability heterogeneous? Evidence from emerging markets and developing economies","authors":"Sunny Kumar Singh , Salva","doi":"10.1016/j.mulfin.2025.100899","DOIUrl":"10.1016/j.mulfin.2025.100899","url":null,"abstract":"<div><div>This paper examines the association between financial stability and financial globalization for 59 emerging markets and developing countries (EMDEs) from 2000 to 2019. Our findings from the baseline model reveal that the relationship between financial stability and financial globalization varies, depending on dimensions of financial globalization (overall, <em>de facto</em>, <em>de jure</em>) and financial stability. The relationship shows nonlinear and heterogeneous patterns across quantiles of financial stability, characterized by well-defined extreme points within the data range. Specifically, by employing panel quantile regression technique, we find that financially unstable countries (lower quantiles of financial stability) exhibit a U-shaped relationship between dimensions of financial globalization and financial stability. In comparison, an inverted U-shaped relationship appears for financially stable countries. Further, we find that countries with weak institutional and financial development exhibit U-shaped relations, experiencing initial instability followed by stability. Conversely, financial stability initially improves for countries with strong institutional and financial development but declines as integration deepens. These findings underscore the importance of strengthening institutions to harness the benefits of financial globalization while mitigating associated risks.</div></div>","PeriodicalId":47268,"journal":{"name":"Journal of Multinational Financial Management","volume":"77 ","pages":"Article 100899"},"PeriodicalIF":2.9,"publicationDate":"2025-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143372394","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-30DOI: 10.1016/j.mulfin.2025.100898
Qi Shi
We provide updated analyses of technical indicators and aggregate stock return forecasting. We construct 105 new technical indicators as big data predictors and adopt eight advanced shrinkage methods in our forecasting analyses. Our evidence suggests that the refinements of 105 technical factors successfully overcome those of Neely et al.’s (2014) 14 technical variables to a large extent and challenge the forecasting role of Welch and Goyal's (2008) 14 popular macroeconomic variables when ENet and Lasso are used. The excellent performance of the forecasting information based on 105 technical indicators generates sufficiently high in-sample and out-of-sample R-squared values and economically sizable gains in forecasting the excess returns of the composite Standard & Poor 500 market. The corresponding evidence remains robust to changes in the business cycle, forecasting horizons, and alternative evaluation periods.
{"title":"Technical indicators and aggregate stock returns: An updated look","authors":"Qi Shi","doi":"10.1016/j.mulfin.2025.100898","DOIUrl":"10.1016/j.mulfin.2025.100898","url":null,"abstract":"<div><div>We provide updated analyses of technical indicators and aggregate stock return forecasting. We construct 105 new technical indicators as big data predictors and adopt eight advanced shrinkage methods in our forecasting analyses. Our evidence suggests that the refinements of 105 technical factors successfully overcome those of Neely et al.’s (2014) 14 technical variables to a large extent and challenge the forecasting role of Welch and Goyal's (2008) 14 popular macroeconomic variables when ENet and Lasso are used. The excellent performance of the forecasting information based on 105 technical indicators generates sufficiently high in-sample and out-of-sample <em>R</em>-squared values and economically sizable gains in forecasting the excess returns of the composite Standard & Poor 500 market. The corresponding evidence remains robust to changes in the business cycle, forecasting horizons, and alternative evaluation periods.</div></div>","PeriodicalId":47268,"journal":{"name":"Journal of Multinational Financial Management","volume":"77 ","pages":"Article 100898"},"PeriodicalIF":2.9,"publicationDate":"2025-01-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143153161","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-07DOI: 10.1016/j.mulfin.2025.100897
Xiaohui Yuan
Despite the importance of institutional environment during bank internationalization, little is known about how the institutional quality distance between host and home markets influences the impact of foreign bank presence on the host market. Using a bank-level panel dataset of 5256 banks from 2017 to 2021, this study finds that institutional quality distance helps mitigate domestic banks’ efficiency losses from foreign bank presence. Moreover, the mitigating effect of institutional quality distance is independent of whether the home countries of foreign banks are institutionally more or less developed. We further observe that the moderating role of institutional quality distance varies across the dimensions of legal, political, regulatory, and economic institutions. Overall, the findings suggest that although foreign bank presence generally hurts the local banking sector, relative institutional quality distance can provide leeway for domestic banks to build competitive advantages to better cope with competition from foreign entrants.
{"title":"Institutional quality distance, foreign bank presence and domestic bank efficiency: Cross-country evidence","authors":"Xiaohui Yuan","doi":"10.1016/j.mulfin.2025.100897","DOIUrl":"10.1016/j.mulfin.2025.100897","url":null,"abstract":"<div><div>Despite the importance of institutional environment during bank internationalization, little is known about how the institutional quality distance between host and home markets influences the impact of foreign bank presence on the host market. Using a bank-level panel dataset of 5256 banks from 2017 to 2021, this study finds that institutional quality distance helps mitigate domestic banks’ efficiency losses from foreign bank presence. Moreover, the mitigating effect of institutional quality distance is independent of whether the home countries of foreign banks are institutionally more or less developed. We further observe that the moderating role of institutional quality distance varies across the dimensions of legal, political, regulatory, and economic institutions. Overall, the findings suggest that although foreign bank presence generally hurts the local banking sector, relative institutional quality distance can provide leeway for domestic banks to build competitive advantages to better cope with competition from foreign entrants.</div></div>","PeriodicalId":47268,"journal":{"name":"Journal of Multinational Financial Management","volume":"77 ","pages":"Article 100897"},"PeriodicalIF":2.9,"publicationDate":"2025-01-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143153159","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-02DOI: 10.1016/j.mulfin.2024.100896
Peter Albrecht , Evžen Kočenda
Using novel methods, we comprehensively analyze volatility connectedness among most traded currencies using high-frequency data from 2009 to 2023. Our study presents the first empirical evidence of a statistically significant association between increases in connectedness and endogenously selected impactful events for most traded currencies. Moreover, we uncover the previously unexplored relationship between twenty-three events affecting global forex connectedness up to one business month ahead and further analyze pre-event connectedness changes. We also distinguish between the transitory and permanent impacts of events on connectedness and confirm the association of four events with a permanent shift in connectedness; two events are associated with the EU and US debt crises. We compute the portfolio weights and hedge ratios for portfolio optimization and uncover the Swiss franc and Japanese yen as the most suitable tools for managing currency risk. The effects of intra-day currency depreciation versus appreciation against the U.S. dollar differ significantly, but the extent of asymmetries declines over time.
{"title":"Event-driven changes in volatility connectedness in global forex markets","authors":"Peter Albrecht , Evžen Kočenda","doi":"10.1016/j.mulfin.2024.100896","DOIUrl":"10.1016/j.mulfin.2024.100896","url":null,"abstract":"<div><div>Using novel methods, we comprehensively analyze volatility connectedness among most traded currencies using high-frequency data from 2009 to 2023. Our study presents the first empirical evidence of a statistically significant association between increases in connectedness and endogenously selected impactful events for most traded currencies. Moreover, we uncover the previously unexplored relationship between twenty-three events affecting global forex connectedness up to one business month ahead and further analyze pre-event connectedness changes. We also distinguish between the transitory and permanent impacts of events on connectedness and confirm the association of four events with a permanent shift in connectedness; two events are associated with the EU and US debt crises. We compute the portfolio weights and hedge ratios for portfolio optimization and uncover the Swiss franc and Japanese yen as the most suitable tools for managing currency risk. The effects of intra-day currency depreciation versus appreciation against the U.S. dollar differ significantly, but the extent of asymmetries declines over time.</div></div>","PeriodicalId":47268,"journal":{"name":"Journal of Multinational Financial Management","volume":"77 ","pages":"Article 100896"},"PeriodicalIF":2.9,"publicationDate":"2025-01-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143153160","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-12-19DOI: 10.1016/j.mulfin.2024.100895
Massimo Belcredi , Lara Faverzani , Andrea Signori
We take advantage of the institutional, fiscal, and regulatory differences across European countries to investigate why firms decide to reincorporate. Reincorporations within Europe have become increasingly common over the last decade, with Italy experiencing the largest outflow of firms and the Netherlands being the preferred destination. We investigate the expansion, tax saving, and regulatory arbitrage explanations. The evidence does not support the expansion and tax saving motivations as we observe no significant changes in firms’ investments and effective tax rates. On the other hand, we find that firms reincorporate in countries with a permissive legislative approach towards the adoption of control-enhancing mechanisms, as predicted by the regulatory arbitrage explanation. This is especially the case of Italian firms reincorporating in the Netherlands as they implement a degree of separation between ownership and control that goes beyond what their country of origin would allow. We discuss the governance implications of such decision.
{"title":"Why do companies reincorporate abroad? Evidence from Europe","authors":"Massimo Belcredi , Lara Faverzani , Andrea Signori","doi":"10.1016/j.mulfin.2024.100895","DOIUrl":"10.1016/j.mulfin.2024.100895","url":null,"abstract":"<div><div>We take advantage of the institutional, fiscal, and regulatory differences across European countries to investigate why firms decide to reincorporate. Reincorporations within Europe have become increasingly common over the last decade, with Italy experiencing the largest outflow of firms and the Netherlands being the preferred destination. We investigate the expansion, tax saving, and regulatory arbitrage explanations. The evidence does not support the expansion and tax saving motivations as we observe no significant changes in firms’ investments and effective tax rates. On the other hand, we find that firms reincorporate in countries with a permissive legislative approach towards the adoption of control-enhancing mechanisms, as predicted by the regulatory arbitrage explanation. This is especially the case of Italian firms reincorporating in the Netherlands as they implement a degree of separation between ownership and control that goes beyond what their country of origin would allow. We discuss the governance implications of such decision.</div></div>","PeriodicalId":47268,"journal":{"name":"Journal of Multinational Financial Management","volume":"77 ","pages":"Article 100895"},"PeriodicalIF":2.9,"publicationDate":"2024-12-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143153162","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using a data set for all companies forming the S&P 500 index, we investigate the stock price responses to acute physical risks, chronic physical risks, and transition risks. Our findings reveal that certain sectors are more vulnerable to climate risks, whereas others appear to be relatively unaffected. In addition, our results show that listed firms with poor environmental performance scores are more exposed to climate risk, as indicated by their stock returns being negatively affected, compared to firms with higher environmental performance scores. This suggests that improving environmental performance may help companies to better cope with climate risks and improve their financial performances. Our analysis provides evidence that the short-term systematic risk is more vulnerable to the climate risk events, whereas effects on long-term systematic risk do not appear to be statistically significant. These findings indicate that investors and firms should pay a particular attention to short-term systematic risk when considering the potential impact of climate risk on stock market performances.
{"title":"Stock market returns and climate risk in the U.S.","authors":"Yiyang Chen , Rogemar Mamon , Fabio Spagnolo , Nicola Spagnolo","doi":"10.1016/j.mulfin.2024.100887","DOIUrl":"10.1016/j.mulfin.2024.100887","url":null,"abstract":"<div><div>Using a data set for all companies forming the S&P 500 index, we investigate the stock price responses to acute physical risks, chronic physical risks, and transition risks. Our findings reveal that certain sectors are more vulnerable to climate risks, whereas others appear to be relatively unaffected. In addition, our results show that listed firms with poor environmental performance scores are more exposed to climate risk, as indicated by their stock returns being negatively affected, compared to firms with higher environmental performance scores. This suggests that improving environmental performance may help companies to better cope with climate risks and improve their financial performances. Our analysis provides evidence that the short-term systematic risk is more vulnerable to the climate risk events, whereas effects on long-term systematic risk do not appear to be statistically significant. These findings indicate that investors and firms should pay a particular attention to short-term systematic risk when considering the potential impact of climate risk on stock market performances.</div></div>","PeriodicalId":47268,"journal":{"name":"Journal of Multinational Financial Management","volume":"77 ","pages":"Article 100887"},"PeriodicalIF":2.9,"publicationDate":"2024-11-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143153163","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-23DOI: 10.1016/j.mulfin.2024.100888
David Rakowski , J. David Diltz , Anh Tuan Nguyen
We explore cross-border divergence in pricing of cross-listed stocks driven by mutual fund flow–driven trading. Drawing on data from the US and forty-four international markets, we find the following: 1) Non-US stock returns are highly correlated with US stock returns and only weakly associated with liquidity-driven US-based mutual fund trading; 2) Approximately 69 % of the variation in non-US stock returns may be attributed to flow-driven trading, controlling for a variety of factors; 3) Stock return divergence is greater for small-cap, narrowly-held, and actively traded stocks; 4) Divergence is greater for stocks cross-listed in Latin American, Caribbean, and Asian-Pacific emerging markets; 5) Divergence is greater for stocks in funds experiencing outflows; and finally 6) Large outflows (i.e., fire sales) have no effect on price divergence across markets.
{"title":"Mutual fund flow-driven trading and the mispricing of cross-listed stocks","authors":"David Rakowski , J. David Diltz , Anh Tuan Nguyen","doi":"10.1016/j.mulfin.2024.100888","DOIUrl":"10.1016/j.mulfin.2024.100888","url":null,"abstract":"<div><div>We explore cross-border divergence in pricing of cross-listed stocks driven by mutual fund flow–driven trading. Drawing on data from the US and forty-four international markets, we find the following: 1) Non-US stock returns are highly correlated with US stock returns and only weakly associated with liquidity-driven US-based mutual fund trading; 2) Approximately 69 % of the variation in non-US stock returns may be attributed to flow-driven trading, controlling for a variety of factors; 3) Stock return divergence is greater for small-cap, narrowly-held, and actively traded stocks; 4) Divergence is greater for stocks cross-listed in Latin American, Caribbean, and Asian-Pacific emerging markets; 5) Divergence is greater for stocks in funds experiencing outflows; and finally 6) Large outflows (i.e., fire sales) have no effect on price divergence across markets.</div><div>This draft: October 31, 2024</div></div>","PeriodicalId":47268,"journal":{"name":"Journal of Multinational Financial Management","volume":"76 ","pages":"Article 100888"},"PeriodicalIF":2.9,"publicationDate":"2024-11-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142722641","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-12DOI: 10.1016/j.mulfin.2024.100885
Truong X. Duong , Zsuzsa R. Huszár , Ruth S.K. Tan
Internationally, documenting the information content from short sellers at the stock level is rather challenging because of various direct and indirect short sale constraints as suggested by Boehmer et al. (2022). To account for stock level short sale constraints and the cross-country variation in short sale feasibility, we focus on short sellers’ information at the aggregate industry and country levels and show that the value-weighted portfolio consisting of stocks from the topmost shorted and top three most shorted industries are associated with 45 bps and 42 bps lower returns over the next 20 days in a sample of 37 countries. The aggregate industry level also shows significant negative information from short sellers in more countries compared to Boehmer et al. (2022), especially in less developed markets. In addition to the industry information, we also find market level information from short sellers and show that high short selling predicts lower future market returns when short sellers target the country’s largest industries. We furthermore document evidence of short sellers' role in global information propagation.
{"title":"How informed are international short sellers? Global and local industry concentration of short sellers","authors":"Truong X. Duong , Zsuzsa R. Huszár , Ruth S.K. Tan","doi":"10.1016/j.mulfin.2024.100885","DOIUrl":"10.1016/j.mulfin.2024.100885","url":null,"abstract":"<div><div>Internationally, documenting the information content from short sellers at the stock level is rather challenging because of various direct and indirect short sale constraints as suggested by Boehmer et al. (2022). To account for stock level short sale constraints and the cross-country variation in short sale feasibility, we focus on short sellers’ information at the aggregate industry and country levels and show that the value-weighted portfolio consisting of stocks from the topmost shorted and top three most shorted industries are associated with 45 bps and 42 bps lower returns over the next 20 days in a sample of 37 countries. The aggregate industry level also shows significant negative information from short sellers in more countries compared to Boehmer et al. (2022), especially in less developed markets. In addition to the industry information, we also find market level information from short sellers and show that high short selling predicts lower future market returns when short sellers target the country’s largest industries. We furthermore document evidence of short sellers' role in global information propagation.</div></div>","PeriodicalId":47268,"journal":{"name":"Journal of Multinational Financial Management","volume":"76 ","pages":"Article 100885"},"PeriodicalIF":2.9,"publicationDate":"2024-11-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142722816","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-09DOI: 10.1016/j.mulfin.2024.100886
Xifang Sun, Tianjian Yang, Liyu Liu
Information asymmetry is one of the significant barriers to the development of multinational banks. This paper examines the impact of China’s social credit system construction in pilot cities and the privatization of credit reporting on the expansion of foreign banks. The findings indicate that the upgrading of China’s social credit system significantly promotes the expansion of foreign banks. Foreign banks establish more business branches in pilot cities and cities with higher levels of privatization in credit reporting systems. The mechanism lies in the fact that the development of the credit reporting system alleviates the information asymmetry for foreign banks. Further analysis reveals that this effect is particularly applicable to foreign banks from European and American markets, globally systemically important banks, cities with high financial development, and regional central cities. This study provides evidence from the perspective of credit reporting system reform to facilitate foreign bank expansion.
{"title":"Does China’s social credit system construction promote foreign bank expansion?","authors":"Xifang Sun, Tianjian Yang, Liyu Liu","doi":"10.1016/j.mulfin.2024.100886","DOIUrl":"10.1016/j.mulfin.2024.100886","url":null,"abstract":"<div><div>Information asymmetry is one of the significant barriers to the development of multinational banks. This paper examines the impact of China’s social credit system construction in pilot cities and the privatization of credit reporting on the expansion of foreign banks. The findings indicate that the upgrading of China’s social credit system significantly promotes the expansion of foreign banks. Foreign banks establish more business branches in pilot cities and cities with higher levels of privatization in credit reporting systems. The mechanism lies in the fact that the development of the credit reporting system alleviates the information asymmetry for foreign banks. Further analysis reveals that this effect is particularly applicable to foreign banks from European and American markets, globally systemically important banks, cities with high financial development, and regional central cities. This study provides evidence from the perspective of credit reporting system reform to facilitate foreign bank expansion.</div></div>","PeriodicalId":47268,"journal":{"name":"Journal of Multinational Financial Management","volume":"76 ","pages":"Article 100886"},"PeriodicalIF":2.9,"publicationDate":"2024-11-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142653888","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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