<abstract xmlns="http://www.w3.org/1999/xhtml"><p>This paper investigates the impact of the degree of capital account openness on banks’ exposure to extreme events during the period 2005-2012 using a sample of financial institutions from Central and Eastern Europe. The empirical output highlights a positive and strongly significant impact of a higher degree of financial openness on banks’ systemic vulnerability. Robust findings suggest that this harmful effect is lower for foreign owned banks or for those whose bank holding company signed one or more Vienna Initiative commitment letters. On the other side, tighter capital regulations and private monitoring policies enhance the positive impact of a higher degree of capital accounts openness on banks’ vulnerability to systemic events.</p></abstract>

This paper investigates the impact of the degree of capital account openness on banks’ exposure to extreme events during the period 2005-2012 using a sample of financial institutions from Central and Eastern Europe. The empirical output highlights a positive and strongly significant impact of a higher degree of financial openness on banks’ systemic vulnerability. Robust findings suggest that this harmful effect is lower for foreign owned banks or for those whose bank holding company signed one or more Vienna Initiative commitment letters. On the other side, tighter capital regulations and private monitoring policies enhance the positive impact of a higher degree of capital accounts openness on banks’ vulnerability to systemic events.

Banks’ Vulnerability and Financial Openness across Central and Eastern Europe

Studia Universitatis Babes-Bolyai Oeconomica

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

This paper investigates the impact of the degree of capital account openness on banks’ exposure to extreme events during the period 2005-2012 using a sample of...

Banks’ Vulnerability and Financial Openness across Central and Eastern Europe

Published Online: Jan 19, 2018

Page range: 47 - 66

DOI: https://doi.org/10.1515/subboec-2017-0013

Keywords
banks’ systemic vulnerability, financial openness, capital regulations

© 2017 Simona Nistor, published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Banks’ Vulnerability and Financial Openness across Central and Eastern Europe

Published Online: Jan 19, 2018

Page range: 47 - 66

DOI: https://doi.org/10.1515/subboec-2017-0013

Keywordsbanks’ systemic vulnerability, financial openness, capital regulations

© 2017 Simona Nistor, published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
banks’ systemic vulnerability, financial openness, capital regulations