Publication date: Available online 11 January 2020
Source: Finance Research Letters
Author(s): Michael S. Pagano, J. Robert, Mary Ellen Darretta
Abstract
In response to the U.S. and Eurozone financial crises of 2008-2009 and 2010-2012, global financial institutions are under greater scrutiny by investors and regulators. This study finds that these global financial institutions have dramatically reduced their foreign operations which, in turn, has coincided with increased inefficiency during 2014-2017. The firmsâ retreat to their home regions is nonlinearly related to inefficiency and has led to inefficiency returning to levels last seen in 2009-2011. These findings indicate that the level of foreign operations is an important determinant that should be included when measuring a large financial firm's efficiency.