The Internationalization of American Banking and Finance: Structure, Risk, adn World Interest Rates / Michael R. Darby.

Format:

Book

Author/Creator:

Darby, Michael R.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w1989.

NBER working paper series no. w1989

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Internationalization of American Banking and Finance

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1986.

Summary:

The transformation of American banking from the parochialism of 1960

to the internationally linked structure of the 1980s is analyzed and

detailed quantitatively. While the liberalization of trade and the

existence of and changes in financial regulations profoundly affected the

pace and order of this transformation, it is argued that international

banking is the historic norm. International banking on the one hand

provides the opportunity to banks to diversify their portfolio, but may

simultaneously expose them to increased systematic risk, especially with

regards to movements in the U.S. real interest rate. Deposit insurance

provides an incentive for banks to take on such priced systematic risk

with welfare costs which must be balanced against the welfare gains from

the insurance. The paper closes with an exploration of the nature of the

linkage of major movements in real interest rates and exchange rates.

Further research seems warranted on monetary-policy-regime changes and

investment-demand shifts as a result of changes in tax, regulatory, and

political climate.

Notes:

Print version record

July 1986.