Functional distance and US global banks’ foreign branch lending

Dieter Vanwalleghem and D’Avino, Carmela

Journal of International Financial Markets, Institutions and Money, 2025, vol. 103, issue C

Abstract: This paper examines the significance of functional distance in explaining the lending behavior of foreign branches of global banks. We operationalize functional distance, or the distance between the global bank’s headquarters and the host country of the foreign branch, along a geographic, linguistic, and cultural dimension. Analyzing the lending activities of US global banks’ foreign branches in 38 countries from 2001 to 2020, we find that geographic and linguistic functional distance has an adverse effect on local lending. We further find that a host country’s institutional quality can moderate the effect of functional distance on local lending.

Keywords: Global banks; Foreign branches; Bank lending; Functional distance (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1042443125000708
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:intfin:v:103:y:2025:i:c:s1042443125000708

DOI: 10.1016/j.intfin.2025.102180

Access Statistics for this article

Journal of International Financial Markets, Institutions and Money is currently edited by I. Mathur and C. J. Neely

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