The Impact of 2008 GFC on Banking Globalization
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Added on 2020-04-01
The Impact of 2008 GFC on Banking Globalization
Added on 2020-04-01
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Running head: THE IMPACT OF 2008 GFC ON BANKING GLOBALIZATION 1The Impact of 2008 GFC on Banking GlobalizationNameInstitution
THE IMPACT OF 2008 GFC ON BANKING GLOBALIZATION 2The Impact of 2008 GFC on Banking GlobalizationAbstractThe cross-boundary bank-lending dropped suddenly following the GFC. However,spreading ownership database bank from the year 1995 to 2009 up to the year 2013 indicatesonly restrained retrenchment in the overseas bank existence. Whereas banks from the OECDeconomies decreased their overseas existence, (though still denotes eighty-nine present ofoverseas bank assets), banks from the emerging markets as well as developing economiesexpands overseas and doubled over their existence. Developed economies, particularly hit by thesystemic GFC decreased their existence overseas, with distant as well as comparatively smallinvestments probably to get sold. IntroductionIn the GFC’s wake, several pundits have argued that the global financial-integration(GFI) has undergone into converse. The deliberations has primarily emphasized on breakdown inthe global cross-border bank stream alongside the disintegration of the financial-markets (FM)inside the euro zone. It remains precise that the need for restoration in the balance sheets as wellas profitability, as well as accomplish stiffer capital needs as well as additional regulatoryalterations purposed to strengthen systems of banking have increasingly incentivized Europeanand, to a smaller degree, American-banks to decrease their global operations. Surged sovereignas well as additional kinds of economies risks have culminated in additional financialfragmentations in certain regions (Rey, 2015). Whereas the collapse in flows of capital as well as cyphers of financial fragmentation issome areas are effectively recorded, the development in overseas bank’s presence have never,establishing certain confusions on real facts. This paper demonstrates that on the basis of
THE IMPACT OF 2008 GFC ON BANKING GLOBALIZATION 3domestic foreign bank presence, that is, domestic “brick and mortar” operations, global-bankingsystem has never been increasingly disjointed. Instead, the disaster has augmented numerousstructural transformation, culminating in a GBS system with a huger array of home economiesactive overseas and 1 that whereas globally few, is regionally integrated. Literature Review Over the course of year 2007, the banking system in various economies witnessed certainsignificant ownership transformation in various dimensions. Thus is never a surprise since asdisturbing as serious as the GFC is bound to have various implications for internationalexpansions as well as decisions on investment of the global-active banks, several of whichremain operational in the crisis-impacted nations (Bodie, 2013). Yet, as certain banks, eithercompelled or willingly, laid off from overseas activities, other banks grasped the opportunitiesfor expanding overseas or grew their market-shares (MS) in the overseas economies (Claessens& Horen, 2014). Various statistics have captured such alterations precisely. First, on the yearlybasis, the number of novel overseas bank entries dropped suddenly from prior to crisis as shownbelow:
THE IMPACT OF 2008 GFC ON BANKING GLOBALIZATION 4In year 2013, merely twenty-two overseas banks made entry, constrated with a climax of132 entries in 2007, or merely around a 20% as many. Among the balance novel entries, lesserwere in greenfields terms, 5 on average in previous three years, constrasted with a climax of 134in the year 2007. Whereas comparatively much more banks made entry in terms of M&As, thereremaiend merely twenty-one M&As in year 2013, or fewer than 25% of their climax in year2007 that had 97 M&As (Bruno & Shin, 2014). As quantity of pull outs (meaning a sale ofanotehr overseas-bank, to a local-bank, or a complete clossue), never grew suddenly, with lowerentries, the net overseas bank-entry stood undesirable in the years 2013 and 2010, for 1st timefrom year 1995 where the database begins. With the net exit takeing place for the 1st time sinceyear 1995, there remaiend a mere drop in quantity of overseas banks active, with quantitydecreasing from 1,301 in year 2007 (following the climaxing at 1,350 in year 2009) to 1,272 inthe year 2013 as indicated in the figure below:
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