Global banks and the picking order in internal capital markets: Do locational activity patterns matter?

D’Avino, Carmela

Journal of International Financial Markets, Institutions and Money, 2024, vol. 97, issue C

Abstract: This paper examines whether global banks’ liquidity reallocations via internal capital markets are driven by the locational activity patterns of their foreign branches. Using aggregated data of foreign branches of US global banks located in 52 countries, we advance evidence of a picking order that favors locations where branches are more heavily engaged in lending activities. Specifically, we find that internal liquidity support to branches in host countries with prominent local lending activities is especially significant during a contraction in local deposits.

Keywords: Global banks; Internal capital markets; Foreign branches (search for similar items in EconPapers)
JEL-codes: F33 F34 F36 G01 G21 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:97:y:2024:i:c:s1042443124001495

DOI: 10.1016/j.intfin.2024.102083

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