Recent cross-border banking within Europe: International balance sheet perspectives

Abstract

We compare the aggregated international assets and liabilities of banks that report to the Bank for International Settlements (BIS) to establish their gross and net international exposures during recent episodes of financial crisis. Initially we consider these positions worldwide and then focus on the cross-border flows within Europe, considered in terms of core and peripheral countries. These gross and net asset–liability positions are both time-varying and respond to crisis periods, through better matching of international assets and liabilities as well as the realignment of asset positions to reduce balance sheet risks. These conclusions are consistent with other studies that utilise international banking flow data, while the European experience highlights the diversity of international position taking. This is due to the complexity of managing risks within the eurozone (EZ) and peripheral countries, and those emerging European countries that retain legacy currencies.

Citation

Batten, J.A., Loncarski, I. and Szilagyi, P.G. (2013), "Recent cross-border banking within Europe: International balance sheet perspectives", Global Banking, Financial Markets and Crises (International Finance Review, Vol. 14), Emerald Group Publishing Limited, Leeds, pp. 15-30. https://doi.org/10.1108/S1569-3767(2013)0000014004