The Czech and Slovak Republics' mass privatization scheme used voucher points distributed to the population and a competitive bidding process to change the governance of a large number of firms. Voucher prices and following secondary market prices are shown to depend upon the resulting ownership structures. The more concentrated ownership is, the higher prices are. High absolute ownership by a single domestic investor is associated with even higher voucher prices. The author finds some evidence that initially prices are relatively lower when a bank-sponsored investment fund has a relatively large stake in a firm. This suggests conflicts of interest.

Abstract Following recent crises, cross-border capital flows have declined considerably, and many advanced countries’ banks are retrenching. At the same time, banks from emerging and developing countries continue to expand abroad, and banking has become more regional. Research highlights that long-term debt flows are less volatile and that foreign banks with larger presence, more domestic funding, and closer relationships provide more finance and share risks better. While ongoing changes in global banking influence its overall benefits, the crises also revealed the need for a consistent framework for supervising and resolving globally active banks, with the European Banking Union an important model.

We investigate how company-level corporate governance practices and country-level legal investor protection jointly affect company performance. We find that in any legal regime there are a few specific governance practices that improve performance. Companies with good governance practices operating in stringent legal environments, however, show a valuation discount relative to similar companies operating in flexible legal environments. At the same time, a stronger country-level regime does not reduce the valuation discount of companies with weak governance practices. Our analysis suggests a threshold level of country development above which stringent regulation hurts the performance of well governed companies or has a neutral effect for poorly governed companies.

Abstract International banks greatly reduced direct cross-border and local affiliates’ lending as the global financial crisis strained their balance sheets, lowered borrower demand, and altered government policies. Using bilateral lender–borrower data and controlling for demand, we show that reductions largely varied in line with markets’ prior assessments of banks’ vulnerabilities, with financial statements’ and lender–borrower data playing minor roles. Those banking systems subject to less market discipline, however, were less sensitive to markets’ perceptions. Moving resources within banking groups became more restricted as drivers of reductions in direct cross-border loans differed from those for local affiliates’ lending, especially for more impaired banking systems.

ABSTRACT The Czech and Slovak Republics' mass privatization scheme used voucher points distributed to the population and a competitive bidding process to change the governance of a large number of firms. Voucher prices and following secondary market prices are shown to depend upon the resulting ownership structures. The more concentrated ownership is, the higher prices are. High absolute ownership by a single domestic investor is associated with even higher voucher prices. I find some evidence that initially prices are relatively lower when a bank‐sponsored investment fund has a relatively large stake in a firm. This suggests conflicts of interest.

Exploiting unique, time-varying, bilateral data on bank ownership for many countries, we show that exports tend to be larger when a foreign bank from the importing country is present. Entry of a foreign bank also boosts export growth to the home country of the foreign bank relative to other countries, especially when foreign bank presence in the country is large and bilateral cross-border lending low. We find supportive evidence that foreign banks facilitate trade by reducing financial frictions for firms. Entry spurs exports to the foreign bank's home country especially in sectors more dependent on external finance, and particularly so in countries less economically and financially developed and with a higher share of foreign banks. Imports of external finance dependent sectors also grow more after entry, but less so than exports do. Exit of a foreign bank does not fully eliminate the beneficial effects of prior foreign bank presence on exports.

Do foreign banks perform better than domestic banks? The existing literature has come up with different answers, in part as data coverage has varied and often been limited. Studying the performance of foreign relative to domestic banks in many countries between 1999 and 2006, we find that the answer importantly depends on a number of factors. Specifically, foreign banks tend to perform better when from a high income country and when regulation in the host country is relatively weak. They also perform better when larger and having a bigger market share. Foreign banks from home countries with the same language and similar regulation as the host country also perform better. Geographical closeness, however, does not improve performance. These findings show that it is important to control for heterogeneity among foreign banks when studying their performance and help reconcile some contradictory results found in the literature.