Study-Unit Description

Study-Unit Description


CODE BKF5210

 
TITLE International Banking

 
UM LEVEL 05 - Postgraduate Modular Diploma or Degree Course

 
MQF LEVEL 7

 
ECTS CREDITS 5

 
DEPARTMENT Banking and Finance

 
DESCRIPTION This study-unit provides a comprehensive overview of and insight into international banking. It begins by explaining what international banking is and how it has developed over time. With reference to the globalisation of banking and financial markets, the study-unit examines factors that continue to shape how international banks operate and behave. The study-unit discusses how international banks meet their client markets through either cross-border lending or subsidiaries overseas, before it examines how banks decide which geographic markets to enter. We evaluate the performance of so-called foreign banks before examining financial crises.

Study-Unit Aims:

The aim of the study-unit is to offer students a critical evaluation of the evolution and development of international banking and of those factors, which shape the strategies and performance of international banks.

Learning Outcomes:

1. Knowledge & Understanding:

By the end of the study-unit the student will be able to:
- Discuss the emergence and evolution of international banking and associated activities;
- Evaluate the debate on regulating international banks and the risks facing these banks;
- Appraise why, where and how banks go abroad and identify outcomes;
- Critically examine cases of market failure in international banking.

2. Skills:

By the end of the study-unit the student will be able to:
- Apply analytical skills in understanding and evaluating the macroeconomic and bank strategic context of international banking;
- Use technical skills in understanding the key drivers of international banking products and markets;
- Comprehend, measure and have developed managerial insight into the important risks facing international banks;
- Appreciate the nature and role of innovation in shaping international banking strategies, products and markets;
- Have developed transferable skills in important management areas like:
    - synthesis;
    - communication;
    - group work;
    - time management;
    - task prioritisation;
    - and presentational skills.

Main Text/s and any supplementary readings:

Relevant reading supports each Lecture. Whilst no single core text exists for this module, the following book is useful and offers practical insights into International Banking and related issues.

Hughes, Jane, E. and Scott B. MacDonald (2002), International Banking: Text and Cases (Addison Wesley) ISBN 0-201-63535-6.

Lecture Schedule and Readings:

1. Introduction to International Banking

- Aliber, R.Z., 1984. International banking: A survey. J. Money, Credit and Banking 16, 4, 661-695.
- Abraham, J-P et al., 1993. The Competitiveness of European International Financial Centres. Institute of European Finance Research Monographs in Banking and Finance, M93/1, (UCNW: Bangor).
- Casu, B., Girardone, C., Molyneux, P., 2015. Introduction to Banking. Pearson. Ch. 4.
- Hughes, J.E., MacDonald, S.B., 2002. International Banking: Text and Cases (Addison-Wesley). Ch. 2.
- McCauley, R.N., Ruud, J.S., Wooldridge, P.D., 2002. Globalising international banking. BIS Quarterly Review, March, 41-51.
- Smith, R.C. & I. Walter, 1997. Global Banking, (Oxford University Press), Ch. 2.

2. A Synopsis of International Banking Activities

- Hughes, J.E., MacDonald, S.B., 2002. International Banking: Text and Cases (Addison-Wesley). Chs 4-6, 8.

3. The New Regulatory Architecture

- Chow, J.T.S., & Surti, J., 2011. Making banks safer: Can Volcker and Vickers do it? IMF Working Paper, WP/11/236.
- Gambacorta, L., van Rixtel, A., 2013. Structural bank regulation initiatives: approaches and implications. BIS Working Papers No 412.
- Basel Committee on Banking Supervision, 2010. The Basel Committee’s response to the financial crisis: report to the G20. October.
- Basel Committee on Banking Supervision, 2010. Group of Governors and Heads of Supervision announces higher global minimum capital standards. Press release, 12 September.
- Caprio, G., Demirgűç-Kunt, A., Kane, A.J., 2008. The 2007 meltdown in structured securitization: searching for lessons, not scapegoats. World Bank Policy Research Working Paper No. 4756.
- Mayer Brown, 2014. Does Volcker + Vickers = Liikanen? Legal Update, February 2014.
- Marques-Ibanez, D., Scheicher, M., 2009. Securitization: Instruments and implications. In Berger, A., Molyneux, P. and Wilson, J. (eds) The Oxford Handbook of Banking (Oxford University Press). Ch. 24.
- Krainer, R.E., 2012. Regulating Wall Street: The Dodd-Frank Act and the new architecture of global finance, a review. J. Financial Stability, 8, 121-133.
- Çihák, M., Demirgüç-Kunt, A., Peria, M.S.M., Mohseni-Cheraghlou, A., 2013. Bank regulation and supervision in the context of the global crisis. J. Financial Stability 9, 733-746.
- Demirgűç-Kunt, A., Detragiache, E., 2010. Basel core principles and bank risk: Does compliance matter? IMF Working Paper WP/10/81.

4. Syndicated Loans

- Altunbaş, Y., Gambacorta, L., Marqués-Ibanez, D., 2010. Large debt financing: syndicated loans versus corporate bonds.
- Chui, M., Domanski, D., Kugler, P., Shek, J., 2010. The collapse of international bank finance during the crisis: evidence from syndicated loan markets. BIS Quarterly Review, September, 39-49.
- De Haas, R., Van Horen, N., 2012. Running for the exit? International bank lending during a financial crisis. Review of Financial Studies, doi:10.1093/rfs/hhs113.
- De Hass, R., van Horen, N., 2012. International shock transmission after the Lehman Brothers collapse: Evidence from syndicated lending. American Economic Review: Papers & Proceedings, 102, 3, 231-237.
- Eichengreen, B., Mody, A., 2000. Lending booms, reserves and the sustainability of short-term debt: inferences from the pricing of syndicated bank loans. J. Development Economics 63, 5-44.
- Gadanecz, B., Tsatsaronis, K., Altunbaş, Y., 2008. External support and bank behaviour in the international syndicated loan market. BIS Working Papers, No. 265, November.
- Gadanecz, B., 2004. The syndicated loan market: structure, development and implications. BIS Quarterly Review, December, 75-90.

5. Country Risk Analysis

- Errico, L. and A. Musalem, 1999. Offshore banking: an analysis of micro- and macro-prudential issues. IMF Working Paper, WP/99/5.
- Smith, R.C., Walter, I., 1997. Global Banking, (Oxford University Press). Chapter 5.

6. The International Debt Crisis

- Cline, W.R., 1995. International Debt Re-Examined. Chapter 5.
- Hughes, J.E. & S.B. MacDonald (2002), International Banking: Text and Cases (Addison-Wesley). Ch 14.

7. The Asian Crisis

- Chang, R., Velasco, A., 2002. The 1997-98 liquidity crisis: Asia versus Latin America. In L. Hernández and K. Schmidt-Hebbel (eds) Banking, Financial Integration, and International Crises (Central Bank of Chile).
- Corsetti, G., Pesenti, P., Roubini, N., 1998. ‘What caused the Asian currency and financial crisis? Part I: a macroeconomic overview; Part II: the policy debate. NBER Working Paper Nos. 6833 and 6834.
- Currie, C., 1998. The Optimum Regulatory Model for the Next Millennium - lessons from international comparisons and the Australian-Asian experience. In Gup, B. (ed) New Financial Architecture for the 21st Century, (Quorum/Greenwood Books, November, 2000) ISBN 1-567200-341-8.
- Radelet, S., Sachs, J., 1998. The East Asian financial crisis: diagnosis, prospects, remedies. Harvard Institute for International Development. Or Brookings Papers on Economic Activity, 1, 1-90.
- Radelet, S., Sachs, J., 1998. The onset of the East Asian financial crisis. Harvard Institute for International Development. Or NBER Working Paper No. 6680.
- Hughes, J.E., MacDonald, S.B., 2002. International Banking: Text and Cases (Addison-Wesley). Ch 14.
- Krueger, A., 1998. Whither the World Bank and the IMF? J. Economic Literature, Vol. XXXVI, Dec., 1983-2020.

8. The Location Decision

- Berger, A.N., Dai, Q., Ongena, S., Smith, D.C., 2003. To what extent will the banking industry be globalized? A study of bank nationality and reach in 20 European nations. J. Banking and Finance 27, 383-415.
- Claessens, S., Van Horen, N., 2014. Location decisions of foreign banks and competitor remoteness. Journal Money, Credit and Banking 46, 1, 145-170.
- Focarelli, D., Pozzolo, A.F., 2005. Where do banks expand abroad? An empirical analysis. J. Business 78, 61, 2435-2463.
- Berger, A.N., 2007. Obstacles to a global banking system: “Old Europe” versus “New Europe”. J. Banking and Finance 31, 1955-1973.
- Berger, A.N., 2007. International comparisons of banking efficiency. Financial Markets, Institutions and Instruments 16, 3, 119-144.
- Buch, C.M., DeLong, G.L. 2001. Cross-border bank mergers: What lures the rare animal? Kiel Institute of World Economics, Working Paper No. 1070.
- Focarelli, D., Pozzolo, A.F., 2001. The patterns of cross-border bank mergers and shareholdings in OECD countries. Journal of Banking and Finance 25, 2305-2337.

9. The Internationalisation of Banking

- Buch, C.M., DeLong, G.L. 2010, 2015. Banking globalization: International consolidation and mergers in banking, in: Berger, A.N., Molyneux, P., Wilson, J.O.S. (Eds.), The Oxford Handbook of Banking. Oxford University Press, Chapters 20 and 31.
- Cardias Williams, F., Williams, J., 2008. Does ownership explain bank M&A? The case of domestic and foreign banks in Brazil. In P. Arestis and L.F. de Paula (eds), Financial Liberalization and Economic Performance in Emerging Countries, Palgrave Macmillan, 194-216.
- Casu, B., Dontis-Charitos, P., Staikouras, S., Williams, J., 2016. Diversification, size and risk: the case of bank acquisitions of nonbank financial firms. European Financial Management, 22, 2, 235-275.
- Williams, J., Liao, A., 2008. The search for value: Cross-border bank M&A in emerging markets. Comparative Economic Studies 50, 274-296.
- Morrison, A.D., 2010, 2015. Universal banking. In Berger, A., Molyneux, P. and Wilson, J. (eds) The Oxford Handbook of Banking (Oxford University Press). Chapters 7 and 5.
- DeYoung, R., Evanoff, D., Molyneux, P., 2009. Mergers and acquisitions of financial institutions: A review of the post-2000 literature. Journal of Financial Services Research, 36, 87-110.

10. Foreign Banks

- Berger, A.N., DeYoung, R., Genay, H., Udell, G.F., 2000. Globalisation of Financial Institutions: Evidence from Cross-Border Banking Performance. Brookings-Wharton Papers on Financial Services 3, 23-158.
- Buch, C.M., Koch, C.T., Koetter, M., 2014. Should I stay or should I go? Bank productivity and internationalization decisions. Journal of Banking and Finance 42, 266-282.
- Claessens, S., Demirgüç-Kunt, A., Huizinga, H., 2001. How does foreign entry affect domestic banking markets? Journal of Banking and Finance 25, 5, 891-911.
- Claessens, S., Van Horen, N., 2013. Foreign banks: Trends and impact. Journal of Money, Credit and Banking 46, 1, 295-326.
- Jeon, B.N., Olivero, M.P., Wu, J., 2011. Do foreign banks increase competition? Evidence from emerging Asian and Latin American banking markets. Journal of Banking and Finance 35, 856-875.
- Fang, Y., van Lelyveld, I., 2014. Geographic diversification in banking. J. Financial Stability 15, 172-181.
- Van Horen, N., 2007. Foreign banking in developing countries; origin matters. Emerging Markets Review 8, 81-105.
- Claessens, S., Van Horen, N., 2012. Being a foreigner among domestic banks: Asset or liability? Journal of Banking and Finance 36, 1276-1290.
- De Haas, R., van Lelyveld, I., 2010. Internal capital markets and lending by multinational banks subsidiaries. Journal of Financial intermediation 19, 1-25.
- De Haas, R., van Lelyveld, I., 2014. Multinational banks and the global financial crisis: Weathering the perfect storm? Journal of Money, Credit and Banking 46, 1, 333-364.

11. International Financial Centres

- The Global Financial Centres Index 21, 2017.
- Hughes, J.E., MacDonald, S.B., 2002. International Banking: Text and Cases (Addison-Wesley). Ch. 7.
- Abraham, J-P et al., 1993. The Competitiveness of European International Financial Centres. Institute of European Finance Research Monographs in Banking and Finance, M93/1, (UCNW: Bangor).

12. Global Banks and Systemic Risk

- Avgouleas, E., 2010. The reform of ‘Too-big-to-fail’ bank: A new regulatory model for the institutional separation of ‘casino’ from ‘utility’ banking. http://ssrn.com/abstract=1552970.
- Chan-Lau, J.A., 2010. Regulatory capital charges for too-connected-to-fail institutions: A practical proposal. IMF Working Paper WP/10/98.
- Demirgűç-Kunt, A., Huizinga, H., 2010. Are banks too big to fail or too big to save? International evidence from equity prices and CDS spreads. World Bank Policy Research Working Paper 5360.
- Herring, R., Carmassi, J., 2010. The corporate structure of international financial conglomerates: Complexity and its implications for safety and soundness. In Berger, A., Molyneux, P. and Wilson, J. (eds) The Oxford Handbook of Banking (Oxford University Press). Chapter 8.
- Herring, R., Carmassi, J., 2015. Complexity and systemic risk: What’s changed since the crisis? In Berger, A., Molyneux, P. and Wilson, J. (eds) The Oxford Handbook of Banking (Oxford University Press). Chapter 4.
- Molyneux, P., Schaeck, K., Zhou, T.M., 2014. Too systemically important to fail’ in banking – Evidence from bank mergers and acquisitions. J. International Money and Finance 49, Part B, 258-282.
- Morrison, A.D., 2010, 2015. Universal banking. In Berger, A., Molyneux, P. and Wilson, J. (eds) The Oxford Handbook of Banking (Oxford University Press). Chapters 7 and 5.
- Zhang, Q., Vallascas, F., Keasey, K., Cai, C.X., 2015. Are market-based measures of global systemic importance of financial institutions useful to regulators and supervisors? Journal of Money, Credit and Banking 47, 7, 1403-1442.

 
STUDY-UNIT TYPE Lecture

 
METHOD OF ASSESSMENT
Assessment Component/s Sept. Asst Session Weighting
Assignment Yes 25%
Examination (3 Hours) Yes 75%

 
LECTURER/S Jonathan Williams

 

 
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It should be noted that all the information in the description above applies to study-units available during the academic year 2023/4. It may be subject to change in subsequent years.

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