Net Interoffice Accounts of Global Banks: The Role of Domestic Funding

Article


D'Avino, C. 2015. Net Interoffice Accounts of Global Banks: The Role of Domestic Funding. International Journal of Financial Studies. 3 (3), pp. 177-193.
AuthorsD'Avino, C.
Abstract

Existing literature has identified domestic restrictive monetary policy and
deteriorating funding conditions as the predominant factors explaining the increase in net
interoffice accounts of global banks, that is, the net liabilities of parent offices due to their
related foreign offices. The purpose of this research is twofold. Firstly, it quantifies the
responsiveness of net interoffice accounts to variations in different types of domestic
funding. Secondly, the paper assesses whether the relationship between net interoffice
accounts and domestic policy-steered rates depends on cross-sectional differences in the
funding structure of global banks. Using US banks’ balance sheets data collected by the
Federal Financial Institutions Examination Council, the results highlight the importance of
domestic repo borrowings in explaining net interoffice accounts, especially for larger
banks during the crisis. On the other hand, a negative relationship between policy rates and
net interoffice accounts is observed only for those global banks with a relatively higher
share of repo borrowings.

JournalInternational Journal of Financial Studies
Journal citation3 (3), pp. 177-193
ISSN2227-7072
Year2015
PublisherMDPI
Accepted author manuscript
License
CC BY
Web address (URL)http://dx.doi.org/10.3390/ijfs3030177
Publication dates
Print26 Jun 2015
Publication process dates
Deposited28 Oct 2015
Accepted12 Jun 2015
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