Are international banks different? Evidence on bank performance and strategy

Ata Bertay, Asli Demirguc-Kunt and Harry Huizinga

No 790, BIS Working Papers from Bank for International Settlements

Abstract: This paper provides evidence on how bank performance and strategies vary with the degree of bank internationalization, using data for 113 countries over 2000-15. Over this period, bank internationalization is associated with lower valuations and lower returns on equity. However, developing country banks that internationalized seem to have fared better than their high-income counterparts. Following the crisis, international banks were revalued particularly if they had stable funding in the form of deposits and if they had more generous deposit insurance coverage. Furthermore, for international banks headquartered in developing countries, our results indicate that bank internationalization reduces the cyclicality of their domestic credit growth with respect to home country gross domestic product growth, smoothing local downturns. In contrast, if the international bank is from a high-income country investing in a developing country, its lending is relatively procyclical, which can be destabilizing.

Keywords: bank internationalization; financial crisis; deposit funding; procyclicality (search for similar items in EconPapers)
JEL-codes: F36 G21 G28 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2019-06
New Economics Papers: this item is included in nep-ban
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Related works:
Journal Article: Are International Banks Different? Evidence on Bank Performance and Strategy (2024)
Working Paper: Are international banks different? Evidence on bank performance and strategy (2024)
Working Paper: Are international banks different? Evidence on bank performance and strategy (2017)
Working Paper: Are international banks different? evidence on bank performance and strategy (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:790

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