The mix of international banks'foreign claims: determinants and implications

Alicia Garcia Herrero and Maria Soledad Martinez Peria

No 3755, Policy Research Working Paper Series from The World Bank

Abstract: The authors analyze the determinants and implications for financial stability of the mix of international banks'claims countries receive. In particular, they distinguish between local claims, extended by international banks through their affiliates in a host (or claim recipient) country, and cross-border claims, booked from outside the host country, typically from banks'headquarters in their home countries. Using data on U.S., Spanish, and Italian banks'foreign claims across countries, the authors find that the share of local foreign claims is primarily driven by the degree of"freedom"in the host banking sector and by business opportunities in the local market. Entry requirements, startup and informational costs associated with international banking also play a role, but their influence is less robust. Finally, they find that the mix of international bank claims has implications for financial stability, since foreign claim volatility is lower in countries that receive a larger share of local claims.

Keywords: Banks&Banking Reform; Financial Intermediation; Insurance&Risk Mitigation; Financial Crisis Management&Restructuring; Banking Law (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fmk
Date: 2005-10-01
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Related works:
Working Paper: The mix of international banks'foreign claims: determinants and implications (2005)
Journal Article: The mix of international banks' foreign claims: Determinants and implications (2007)
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