TY  - UNPD
A1  - Gropp, Reint
A1  - Radev, Deyan
T1  - Social centralization, bank integration and the transmission of lending shocks
T2  - SAFE working paper series ; No. 174
N2  - We introduce an innovative approach to measure bank integration, based on the corporate culture of multinational banking conglomerates. The new measure, the Power Index, assesses the prevalence of a language of power and authority in the financial reports of global banks. We employ a two-step approach: as a first step, we investigate whether parent-bank or parent-country characteristics are more important for bank integration. In a second step, we analyze whether bank integration affects the transmission of shocks across borders. We find that the level of integration of global banks is determined by parent-bank-specific factors, as well as by the social centralization in the parent’s country: ethnically diverse and linguistically homogenous countries nurture decentralized corporate structures. Political and economic factors, such as corruption, political rights and economic development also affect bank integration. Furthermore, we find that organizational integration affects the transmission of exogenous shocks from parent banks to their subsidiaries: the more centralized a global bank is, the lower the lending of its subsidiaries after a solvency shock. Wholesale shocks do not appear to be transmitted through this channel. Also, past experience with solvency shocks reduces the integration between parents and subsidiaries.
T3  - SAFE working paper - 174 
KW  - global banks
KW  - social centralization
KW  - bank integration
KW  - shocks
KW  - transmission
Y1  - 2017
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/43746
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-437467
UR  - https://ssrn.com/abstract=3012003
IS  - August 1, 2017
PB  - SAFE
CY  - Frankfurt am Main
ER  -