Foreign activities of U.S. banks since 1997: The roles of regulations and market conditions in crises and normal times

Judit Temesvary

Journal of International Money and Finance, 2015, vol. 56, issue C, 202-222

Abstract: Using a unique newly constructed dataset on U.S. banks' foreign activities since 1997, this paper examines how bank, market and regulatory conditions in the U.S. and host countries affect U.S. banks' choices of which foreign markets to enter and how much claims and liabilities to take on there. Using a two-stage structural estimation framework, the determinants of foreign market entry/exit, cross-border claims, and foreign affiliate claims and liabilities choices are examined in 107 host countries around the world. It is shown that (1) the health of the balance sheet is the primary driver of foreign market entry/exit choices (especially so during the Subprime crisis), while host market and regulatory conditions play important roles in the choice of claims/liabilities volumes; (2) banks choose their foreign activities during banking and market crises differently than they do in ‘normal’ times; and (3) in addition to bank size, previous experience with managing a global lending network significantly increases the intensity of banks' foreign involvement. Structural estimates of the costs of foreign market entry/exit and host market regulatory stringency are also derived.

Keywords: International banking; Market entry and exit; Affiliate claims; Cross-border claims; Bank regulation (search for similar items in EconPapers)
JEL-codes: C53 F37 G11 G15 G21 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0261560614001491
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:56:y:2015:i:c:p:202-222

DOI: 10.1016/j.jimonfin.2014.09.008

Access Statistics for this article

Journal of International Money and Finance is currently edited by J. R. Lothian

More articles in Journal of International Money and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().