School of Business | Department of Finance | Finance | 2012
Thesis number: 13100
Home bias and distribution of bond mandates - Evidence from international corporate bond market during 2008 financial crisis
| Author: | Anttila, Valtteri |
| Title: | Home bias and distribution of bond mandates - Evidence from international corporate bond market during 2008 financial crisis |
| Year: | 2012 Language: eng |
| Department: | Department of Finance |
| Academic subject: | Finance |
| Index terms: | rahoitus; financing; rahoitusmarkkinat; financial markets; kriisi; crisis; pankit; banks; kilpailu; competition |
| Pages: | 70 |
| Full text: | |
| Key terms: | bond underwriting; home bias; financial markets; financial crisis; bank competition |
| Abstract: |
In this thesis I study how home bias varies over time in context of international corporate bond
underwriting. I observe that home bias in bank’s country level underwriting portfolio increases by
27% on average when experiencing a crisis at its home market. The effect is limited to transparent
and higher quality issuers, indicating homogeneous treatment of more opaque and lower credit
quality issuers during crisis independent of their geographic origin. I also show that banks tend to
withdraw to lesser extent from markets where underlying sovereign credit quality is higher than
the one in their home market, suggesting that the shift is somewhat driven by flight to quality considerations.
Moreover, I find that banks treat their relationship client firms equally during crisis regardless of their home origin. I also show that increase in home bias is positively correlated with geographical distance between the issuer and the underwriting bank. I find no evidence that the increase would be less severe when the underwriting bank shares common familiarity characteristics with the issuer. |
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