Internal Capital Market Practices of Multinational Banks: Evidence from South Africa

A. Pelletier | MFW4A

This paper examines how internal capital flows inside multinational banks create global financial interconnections. It relies on a novel database on banks operating in South Africa which tracks the exchanges of internal capital between the foreign affiliates located in South Africa and their banking group. Using the event of the East Asian Crisis, the research shows that foreign affiliates' balance sheet are not immune to "reversal of fortune" when other members of their banking group need large amounts of internal capital to cushion capital losses, leading to an abrupt reallocation of internal capital across countries.

Categories:
South Africa, Capital Markets, Regulators/Securities & Exchange Commissions, Legal & Regulatory Environment, Banking
Pages:
38
Year of publication:
30.11.2015
File size:
1085735 bytes