Home bias of Eurozone banks during the financial and sovereign crisis

Michael Eichert
2014 unpublished
This paper uncovers two characteristics concerning cross-border bank positions for securities other than shares in the euro zone. First, the home bias for securities other than shares in the balance sheet of euro zone banks increased after the financial crisis of 2008. Second, the home bias in countries where governments face financial distress increases even further. The rise of the home bias can be explained by the theory on secondary markets of sovereign debt and information frictions. A
more » ... home bias has important policy implications for the Eurozone and re-intensifies the need for addressing the link between sovereigns and banks in the Eurozone with decisive policy actions.
doi:10.25365/thesis.32052 fatcat:tgubb2eb4vdr5pq2z2xnvr2zmq