u s monetary policy and emerging market credit cycles abstract foreign banks lending to firms in emerging market economies emes is large and denominated predominantly in u s dollars this creates a direct connection between u s monetary policy and eme credit cycles we estimate that over a typical u s monetary easing cycle eme borrowers experience a 32 percentage point greater increase in the volume of loans issued by foreign banks than do borrowers from developed markets followed by a fast credit contraction of a similar magnitude upon reversal of the cycle consistent with a risk driven credit supply adjustment we show that the spillover is stronger for riskier emes and within countries for higher risk firms

bank loan portfolios and the monetary transmission mechanism abstract we study the portfolio behavior of bank loans following a monetary tightening and find that real estate and consumer loans sharply decrease while commercial and industrial c i loans increase these responses are compared with responses following non monetary shocks which also reduce output but keep interest rates roughly unchanged during such a non monetary downturn c i loans sharply decrease while real estate and consumer loans show no substantial response these responses together with the responses of relevant lending rates are hard to reconcile with a decline in the supply of c i bank loans during a monetary downturn as stressed by the bank lending channel several arguments are presented explaining why the supply of c i loans may actually increase after a monetary contraction

asset pricing in multiperiod securities markets the intertemporal models developed in this paper have been stimulated by the capital asset pricing model capm of sharpe and lintner and the role of factor structure in ross arbitrage pricing theory apt suppose that some one dimensional stochastic process s provides a sufficient statistic for aggregate consumption then a heuristic dynamic programming argument shows that s market wealth and the wealth derivative of the value function for any agent are all locally perfectly correlated it follows from merton s work that there is a linear relationship between the local mean return on a security and the local covariance of that return with the return on the market portfolio the formal development uses martingale representation and martingale projection to obtain an intertemporal capm the history of a scalar brownian motion plays the role of a sufficient statistic we motivate the assumption of a sufficient statistic for aggregate consumption by considering a countable set of securities whose payoffs have an approximate factor structure where the factor components are in the information set generated by an n dimensional brownian motion and the idiosyncratic components are weakly correlated the approximate factor structure on the security payoffs implies that the rates of return have locally an approximate factor structure the role of the market portfolio can now be played by a set of n well diversified portfolios

stochastic equilibria existence spanning number and the no expected financial gain from trade hypothesis stochastic equilibria under uncertainty with continuous time security trading and consumption are demonstrated in a general setting a common question is whether the current price of a security is an unbiased predictor of the future price of the security plus intermediate dividends this is the hypothesis of no expected financial gains from trade the relevance of this hypothesis in multi good economies is called into question by the following demonstrated fact for each set of probability assessments there exists a corresponding equilibrium one with the original agents original equilibrium allocations and no expected financial gains from trade under the given probability assessments the spanning number of the economy is defined as the fewest number of security markets required to sustain a complete markets equilibrium in a dynamic sense made precise in the paper the spanning number is linked directly to agent primitives in particular the manner in which new information resolves uncertainty over time the spanning number is shown to be invariant under bounded changes in expectations several examples are given in which the spanning number is finite even though the number of potential states of the world is infinite

international bank lending channel of monetary policy abstract how does domestic monetary policy in systemic countries spillover to the rest of the world this paper examines the transmission channel of domestic monetary policy in the cross border context we use exogenous shocks to monetary policy in systemically important economies including the u s and local projections to estimate the dynamic effect of monetary policy shocks on bilateral cross border bank lending we find robust evidence that an increase in funding costs following an exogenous monetary tightening leads to a statistically and economically significant decline in cross border bank lending the effect is weakened during periods of high uncertainty in contrast the effect is found to not vary according to the degree of borrower country riskiness further weakening support for the international portfolio rebalancing channel

a new approach to the spatial theory of electoral competition in his unidimensional model of electoral competition downs argues that voters use party ideology as an informational short cut for forecasting the policies that a party will pursue if elected parties are perceived by voters as points on an ideological axis in the davis hinich multidimensional model on the other hand the axes are real issues and the principal actors are politicians who are modeled as points in the multi issue space this paper reformulates spatial voting theory in terms of a model that connects what we call predictive dimensions with political issues that are salient during a given election campaign this model is both a synthesis and an extension of the downs and davis hinich spatial models we obtain a median voter result for one predictive dimension that is similar to the downs result but with important differences we also obtain results showing the electoral advantage of incumbency and the tendency for incremental change when there is a great deal of heterogeneity in voter perceptions about the candidates

nash equilibrium strategies in directional models of two candidate spatial competition the standard approach to two party political competition in a multi dimensional issue space models voters as voting for the alternative that is located closest to their own most preferred location another approach to understanding voter choice is based on preferred direction of change with respect to some specified neutral point e g an origin or status quo point

mean variance theory in complete markets two paradigms in the pricing of risky assets are the complete markets model of arrow and debreu and mean variance pricing as embodied in the capital asset pricing model capm the former is primarily of theoretical interest in fact prior to the recent work of banz and miller 1978 and breeden and litzenberger 1978 there was little thought or hope of practical applications on the other hand the hegemony of the capm is due mostly to its apparent ease of applicability and to a lesser extent its empirical justification in a competitive market with no taxes transactions costs or institutional constraints on portfolio holdings the allocation of the available assets will be pareto optimal the end of period distribution of wealth or the consumption goods however will typically be pareto optimal only when there is available an arrow debreu security for each contingency since by definition a pareto superior reallocation is weakly preferred by all investors a complete set of arrow debreu markets should naturally arise provided they are not too costly to establish the complete markets model of arrow and debreu and the meanvariance capital asset pricing model capm are two paradigms of risky asset markets this paper provides an integration of these two theories we prove that the standard meanvariance separation theorem obtains in a complete market only if all investors have quadratic utility in addition the familiar capm pricing relation can hold for all assets in a complete market only if arbitrage opportunities exist on the positive side we show that the validity of this relation for the primary assets in a complete market is unaffected by the distribution of returns on the created financial assets

a directional theory of issue voting from stokes s 1963 early critique on it has been clear to empirical researchers that the traditional spatial theory of elections is seriously flawed yet fully a quarter century later that theory remains the dominant paradigm for understanding mass elite linkage in politics we present an alternative spatial theory of elections that we argue has greater empirical verisimilitude based on the ideas of symbolic politics the directional theory assumes that most people have a diffuse preference for a certain direction of policy making and that people vary in the intensity with which they hold those preferences we test the two competing theories at the individual level with national election study data and find the directional theory more strongly supported than the traditional spatial theory we then develop the implications of the directional theory for candidate behavior and assess the predictions in light of evidence from the u s congress

fickle capital flows and retrenchment evidence from bilateral banking data abstract we empirically examine the response of cross border capital flows to economic uncertainty using bilateral banking flow data we show that while banks reduce their exposure to a foreign country when it becomes more risky they tend to increase their exposure to their home country in bad times a retrenchment to further understand this puzzle we examine how the differential response to foreign and domestic uncertainty is affected by country specific characteristics bilateral characteristics and crises our analysis suggests that most of the current theories based on either information asymmetries between foreign and domestic investors or institutional risk cannot explain bilateral data well on the other hand our results show that global crises have an asymmetric impact on the risk attitudes of banking institutions towards country specific uncertainty global crises make investors more risk averse towards foreign uncertainty but have no effect on the responsiveness to domestic uncertainty

new players in an old game party strategy in multiparty systems this article compares two spatial models of party competition a the traditional proximity model and b the directional model of voter choice the article first lays out the differences between the two models in multiparty systems the traditional proximity model makes no clear prediction about the spatial structure of political parties the directional model predicts that optimal placement for parties will be along the circumference of a circle at a moderate distance from the center both theories have implications for overtime strategy and the success of new political parties traditional proximity theory emphasizes movement toward a location with high density of voters while directional theory emphasizes the importance of a distinct directional strategy the authors examine the norwegian political system from 1969 1985 and the swedish system from 1979 1982 and find the directional theory more strongly supported

distance versus direction the illusory defeat of the proximity theory of electoral choice in an extensive series of articles rabinowitz macdonald and listhaug have launched a new directional theory of electoral choice according to their claims the new theory is superior to the classical downsian proximity model such a conclusion however is not tenable first it fails to take proper account of the lower falsifiability of the directional model second it rests on empirical analyses that do not test the two theories on the predictions they actually make both are theories of individual choice which implies intrapersonal comparisons of utility prior tests however have predominantly taken the form of interpersonal comparisons a reanalysis based on the proper type of comparison yields an outcome diametrically opposed to that previously obtained it also reveals an eccentricity effect that largely accounts for the apparent success of the directional model

transmission of monetary policy through global banks whose policy matters abstract this paper explores the basic question of whose monetary policy matters for banks international lending in the international context monetary policies from several countries could come into play the lender s the borrower s and that of a third country the issuer of the currency in which cross border lending is denominated using the rich dimensionality of the bis international banking statistics we find significant effects for all three policies us monetary easing fuels cross border lending in us dollars as befits a global funding currency at the same time a tightening in the lender or the borrower country reinforces international dollar lending as global banks turn to the greenback for cheaper funding and toward borrowers abroad our results also show that stronger capitalization and better access to funding sources mitigate the frictions underpinning the transmission channels analogous results for euro denominated lending confirm that global funding currencies play a key role in international monetary policy transmission

financial institutions business models and the global transmission of monetary policy abstract global financial institutions play an important role in channeling funds across countries and therefore transmitting monetary policy from one country to another in this paper we study whether such international transmission depends on financial institutions business models in particular we use dutch spanish and u s confidential supervisory data to test whether the transmission operates differently through banks insurance companies and pension funds we find marked heterogeneity in the transmission of monetary policy across the three types of institutions across the three banking systems and across banks within each banking system while insurance companies and pension funds do not transmit home country monetary policy internationally banks do with the direction and strength of the transmission determined by their business models and balance sheet characteristics

an intertemporal general equilibrium model of asset prices this paper develops a continuous time general equilibrium model of a simple but complete economy and uses it to examine the behavior of asset prices in this model asset prices and their stochastic properties are determined endogenously one principal result is a partial differential equation which asset prices must satisfy the solution of this equation gives the equilibrium price of any asset in terms of the underlying real variables in the economy in this paper we develop a general equilibrium asset pricing model for use in applied research an important feature of the model is its integration of real and financial markets among other things the model endogenously determines the stochastic process followed by the equilibrium price of any financial asset and shows how this process depends on the underlying real variables the model is fully consistent with rational expectations and maximizing behavior on the part of all agents our framework is general enough to include many of the fundamental forces affecting asset markets yet it is tractable enough to be specialized easily to produce specific testable results furthermore the model can be extended in a number of straightforward ways consequently it is well suited to a wide variety of applications for example in a companion paper cox ingersoll and ross 7 we use the model to develop a theory of the term structure of interest rates many studies have been concerned with various aspects of asset pricing under uncertainty the most relevant to our work are the important papers on intertemporal asset pricing by merton 19 and lucas 16 working in a continuous time framework merton derives a relationship among the equilibrium expected rates of return on assets he shows that when investment opportunities are changing randomly over time this relationship will include effects which have no analogue in a static one period model lucas considers an economy with homogeneous individuals and a single consumption good which is produced by a number of processes the random output of these processes is exogenously determined and perishable assets are defined as claims to all or a part of the output of a process and the equilibrium determines the asset prices our theory draws on some elements of both of these papers like merton we formulate our model in continuous time and make full use of the analytical tractability that this affords the economic structure of our model is somewhat similar to that of lucas however we include both endogenous production and

a continuous time arbitrage pricing model with stochastic volatility and jumps we formulate and test a continuous time asset pricing model using u s equity market data we assume that stock returns are driven by common factors including random jump size poisson processes and brownian motions with stochastic volatility the model places overidentifying restrictions on the mean returns allowing one to identify risk neutral probability distributions useful in pricing derivative securities we test for the restrictions and decompose moments of the asset returns into the contributions made by different factors our econometric methods take full account of time aggregation

conceptualizing voter choice for directional and discounting models of two candidate spatial competition in terms of shadow candidates in contrast to the traditional modeling of voter choice based on proximity under directional models selection of candidates is based on the direction and or intensity of change from a status quo or neutral point voter choice can also be modeled as representing both approaches e g as a directional model with proximity restraint or alternatively in terms of proximity to discounted positions

the effects of monetary policy shocks on inequality abstract this paper provides new evidence of the effect of conventional monetary policy shocks on income inequality we construct a measure of unanticipated changes in policy rates changes in short term interest rates that are orthogonal to unexpected changes in growth and inflation news for a panel of 32 advanced and emerging market countries over the period 1990 2013 our main finding is that contractionary monetary policy shocks increase income inequality on average the effect is asymmetric tightening of policy raises inequality more than easing lowers it and depends on the state of the business cycle we find some evidence that the effect increases with the share of labor income and is mitigated by redistribution policies finally while an unexpected increase in policy rates increases inequality changes in policy rates driven by an increase in growth and inflation are associated with lower inequality

fiscal foresight and information flows news or foresight about future economic fundamentals can create rational expectations equilibria with non fundamental representations that pose substantial challenges to econometric efforts to recover the structural shocks to which economic agents react using tax policies as a leading example of foresight simple theory makes transparent the economic behavior and information structures that generate non fundamental equilibria econometric analyses that fail to model foresight will obtain biased estimates of output multipliers for taxes biases are quantitatively important when two canonical theoretical models are taken as data generating processes both the nature of equilibria and the inferences about the effects of anticipated tax changes hinge critically on hypothesized information flows different methods for extracting or hypothesizing the information flows are discussed and shown to be alternative techniques for resolving a non uniqueness problem endemic to moving average representations

the consumption based capital asset pricing model the paper provides conditions on the primitives of a continuous time economy under which there exist equilibria obeying the consumption based capital asset pricing model ccapm the paper also extends the equilibrium characterization of interest rates of cox ingersoll and ross 1985 to multi agent economies we do not use a markovian state assumption this work provides sufficient conditions on agents primitives for the validity of the consumption based capital asset pricing model ccapm of breeden 1979 as a necessary condition breeden showed that in a continuous time equilibrium satisfying certain regularity conditions one can characterize returns on securities as follows the expected instantaneous rate of return on any security in excess of the riskless interest rate the security s expected excess rate of return is a multiple common to all securities of the instantaneous covariance of this excess return with aggregate consumption increments this common multiple is the arrow pratt measure of risk aversion of a representative agent rubinstein 1976 published a discrete time precursor of this result the exis tence of equilibria satisfying breeden s regularity conditions had been an open issue we also show that the validity of the ccapm does not depend on breeden s assumption of markov state information and present a general asset pricing model extending the results of cox ingersoll and ross 1985 as well as the discrete time results of rubinstein 1976 and lucas 1978 to a multi agent environment since the ccapm was first proposed much effort has been directed at finding sufficient conditions on the model primitives the given assets the agents preferences the agents consumption endowments and in a production econ omy the feasible production sets conditions sufficient for the existence of continuous time equilibria were shown in duffie 1986 but the equilibria demonstrated were not shown to satisfy the additional regularity required for the ccapm in particular breeden assumed that all agents choose pointwise interior consumption rates in order to characterize asset prices via the first order conditions of the bellman equation interiority was also assumed by huang 1987 in demonstrating a representative agent characterization of equilibrium an approach exploited here the use of dynamic programming and the bellman equation aside from the difficulty it imposes in verifying the existence of interior 1 financial support from the national science foundation is gratefully acknowledged we thank

strategic decisions under one stage multi candidate voting systems we have seen that under the assumptions of this study the problem of maximizing a voter s total utility for a number of one stage decision rules for multi candidate elections may be specified as linear or quadratic programs potentially optimal strategies emerge as extreme points of the feasible region in the sense that no other strategies can be uniquely optimal categorical approval borda and z score decision rules are all minimal in the sense that for each the feasible region with abstentions excepted consists entirely of potentially uniquely optimal strategies for each of these decision rules we have determined the optimal strategies explicitly in terms of the voter s utility function among the minimal voting systems studies we argue that the voter s task of estimating his optimal strategy is least difficult under approval voting

uncertainty and cross border banking flows abstract while global uncertainty measured by the vix has proven to be a robust global push factor of international capital flows there has been no systematic study assessing the role of uncertainty in driving bilateral capital flows this paper examines the effects of higher country specific uncertainty on cross border banking flows using data from the bank for international settlements locational banking statistics the bilateral structure of this data allows disentangling supply factors from demand factors thereby helping identify the effect of higher uncertainty on cross border banking flows from other confounding factors the results of this analysis suggest that i uncertainty in a source country domestic economy is both a lender specific push and pull factor that robustly predicts a decrease in outflows cross border lending and inflows cross border borrowing ii the decline in cross border borrowing is larger than the decline in cross border lending that is the net cross border position of the banking sector increases iii despite a decline in cross border bank lending in the absolute sense the share of cross border bank lending in total bank lending increases suggesting a portfolio rebalancing iv this rebalancing occurs only when banks are lending to borrowers in advanced economies but not to those in emerging market economies

a comparative assessment of the spillovers of us monetary policy shocks and its mitigation abstract we conduct a comparative assessment of the spillovers of three types of fed s monetary policy surprises i e fed funds rate ffr forward guidance fg and large scale asset purchases lsap on monetary autonomy in the periphery economies pes we find these shocks to be significant in causing loss of monetary autonomy in the pes we also find that the macroprudential tools mitigate the degree of such impairment this holds for two types of macroprudential policies i e borrower targeted and financial institutions targeted we find both of them to be most effective against the ffr shocks comparing the macroprudential tools we find the financial institutions targeted tools to be more effective than the borrower targeted ones in mitigating the degree of impairment against all types of fed shocks

intertemporal arbitrage pricing theory it is shown that the arbitrage pricing theory holds in each infinitesimal period of a continuous trading model under the assumption that dividend payoffs are functionals of factor and idiosyncratic uncertainty this generalizes the one period model s result that the arbitrage pricing theory holds under the assumption that price changes in a given period satisfy a factor structure since instantaneous returns in a multiperiod model are endogenously determined the theory is derived under assumptions that may be viewed as restricting more primitive characteristics of the economy than the assumptions made for the one period model article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

monetary policy surprises and interest rates evidence from the fed funds futures market abstract this paper estimates the impact of monetary policy actions on bill note and bond yields using data from the futures market for federal funds to separate changes in the target funds rate into anticipated and unanticipated components interest rates response to anticipated target rate changes is small while their response to unanticipated changes is large and highly significant these responses are generally consistent with the expectations hypothesis of the term structure surprise target rate changes have little effect on expectations of future actions however which helps to explain the lack of empirical support for the expectations hypothesis at the short end of the yield curve

a unified beta pricing theory abstract this paper derives ross s mutual fund separation theory and a new equilibrium version of ross s arbitrage pricing theory as special cases of a general theory the paper also reveals that the two theories are identical in their predictions of asset prices and portfolio returns the capital asset pricing model a restricted case of the mutual fund separation theory receives special treatment

voting behavior under the directional spatial model of electoral competition this paper contrasts voting behavior in multicandidate elections between the proximity and the directional spatial models of electoral competition under the traditionalproximity spatial model a voter s utility for a candidate is a declining function of distance between their respective positions under thedirectional spatial model introduced by rabinowitz and macdonald utility is specified as the scalar product of the vectors representing voter and candidate the present paper specifies and compares regions of candidate support for the two models and for several voting procedures the degree to which each model and voting system favors extremist versus centrist candidates is assessed it is shown that a pure directional model implies that candidates lying in the interior of the convex hull of the other candidates receive no support under the single vote plurality procedure a one parameter family of mixed proximity and directional models may provide more plausible descriptions of voter behavior than either pure model

the great retrenchment international capital flows during the global financial crisis the current crisis saw an unprecedented collapse in international capital flows after years of rising financial globalization we identify the stylized facts and main drivers of this development the retrenchment in international capital flows is a highly heterogeneous phenomenon first across time being especially dramatic in the wake of the lehman brothers failure secondly across types of flows with banking flows being the hardest hit due to their sensitivity of risk perception and thirdly across regions with emerging economies experiencing a shorter lived retrenchment than developed economies our econometric analysis shows that the magnitude of the retrenchment in capital flows across countries is linked to the extent of international financial integration its specific nature with countries relying on bank flows being the hardest hit as well as domestic macroeconomic conditions and their connection to world trade flows gian maria milesi ferretti and cedric tille

the valuation of nonsystematic risks and the pricing of swedish lottery bonds swedish government lottery bonds have coupon payments determined by lottery they offer a unique opportunity to study a security with uncertain payoffs having a known observable distribution the risk associated with the lotteries is idiosyncratic by construction and should not command a risk premium in equilibrium the bonds are traded in two forms allowing us to evaluate the rewards to bearing extra lottery risk despite its idiosyncratic nature we find prices appear to reflect aversion to this risk we evaluate the empirical determinants of this differential pricing and possible explanations for it article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

the effects of government spending on real exchange rates evidence from military spending panel data abstract using panel data on military spending for 125 countries we document new facts about the effects of changes in government purchases on the real exchange rate consumption and current accounts in both advanced and developing countries while an increase in government purchases causes real exchange rates to appreciate and increases consumption significantly in developing countries it causes real exchange rates to depreciate and decreases consumption in advanced countries the current account decreases in both groups of countries these findings are not consistent with standard international business cycle models we discuss potential sources of the differences between advanced and developing countries in the responses to spending shocks

incremental risk aversion and diversification preference abstract the class of mean independent incremental risks defined with respect to an initial risk or status quo is shown to coincide with the vector space of incremental risks generated from risks that are individually independent of the status quo using this characterization of mean independence aversion toward independent risk increases together with diversification preference for mean independent risk increases implies aversion toward mean independent risk increases by contrast a nondiversifier who is averse to independent risk increases may nonetheless strictly prefer certain mean preserving increases in risk journal of economic literature classification numbers d80 d81

output spillovers from fiscal policy in this paper we estimate the cross country spillover effects of government purchases on output for a large number of oecd countries following the methodology in auerbach and gorodnichenko 2012a b we allow these multipliers to vary smoothly according to the state of the economy and use real time forecast data to purge policy innovations of their predictable components we also consider the responses of other key macroeconomic variables our findings suggest that cross country spillovers have an important impact and also confirm those of our earlier papers that fiscal shocks have a larger impact when the affected country is in recession

consumption and portfolio policies with incomplete markets and short sale constraints the infinite dimensional case abstract we employ a martingale approach to study a dynamic consumption portfolio problem in continuous time with incomplete markets and short sale constraints we introduce a notion of minimax local martingale and transform the dynamic problem into a static problem of maximizing expected utility over the consumption bundles that satisfy a single budget constraint formed using that measure we establish the existence of and characterize the minimax local measure provide sufficient conditions for the dynamic consumption portfolio problem to have a solution and relate the optimal policies to the solution of quasi linear partial differential equation

oil prices and inflation dynamics evidence from advanced and developing economies abstract we study the impact of fluctuations in global oil prices on domestic inflation using an unbalanced panel of 72 advanced and developing economies over the period from 1970 to 2015 we find that a 10 increase in global oil inflation increases on average domestic inflation by about 0 4 percentage points on impact with the effect vanishing after two years and being similar between advanced and developing economies we also find that the effect is asymmetric with positive oil price shocks having a larger effect than negative ones the impact of oil price shocks however has declined over time due in large part to a more credible monetary policy and less reliance on energy imports we further examine the transmission channels of oil price shocks on domestic inflation during the recent decades by making use of a monthly dataset from 2000 to 2015 the results suggest that the share of transport in the cpi basket and energy subsidies are the most robust factors in explaining cross country variations in the effects of oil price shocks during the period

asymmetric effects of positive and negative money supply shocks this paper examines whether positive and negative money supply shocks have symmetric effects on output the results are consistent with the hypothesis that positive money supply shocks do not have an effect on output while negative money supply shocks do have an effect on output this finding is independent of whether or not expected money is assumed to affect output the results reported in this paper imply that the fed could increase the growth rate of real output by reducing the standard deviation of unexpected changes in the money supply

u s monetary policy and fluctuations of international bank lending abstract there is no consensus in the empirical literature on the direction in which u s monetary policy affects cross border bank lending we find robust evidence that the impact of the u s federal funds rate on cross border bank lending in a given period depends on the prevailing international capital flows regime and on the level of the two main components of the federal funds rate macroeconomic fundamentals and the monetary policy stance during episodes in which bank lending from advanced to emerging economies is booming the relationship between the federal funds rate and cross border bank lending is positive and mostly driven by the macroeconomic fundamentals component which is consistent with a search for yield behavior by internationally active banks in contrast during episodes of stagnant growth in bank lending from advanced to emerging economies the relationship between the federal funds rate and bank lending is negative mainly due to the monetary policy stance component of the federal funds rate the latter set of results is most pronounced for lending to emerging markets which is consistent with the international bank lending channel and flight to quality behavior by internationally active banks