Global banks and internal capital markets: Evidence from bank-level panel data in emerging economies

Bang Jeon and Ji Wu

Journal of Multinational Financial Management, 2014, vol. 28, issue C, 79-94

Abstract: In this paper, we examine the operation of internal capital markets within multinational financial conglomerates. We observe the lending behavior of foreign subsidiaries of the major multinational banks which conduct banking activities in emerging and developing countries. Using loan growth-to-internally generated funds sensitivity as a measure of subsidiary's financing constraints, we explore whether such sensitivity is correlated with the availability of internally generated funds at the consolidated banking organizational level, and find robust evidence for the operation of internal capital markets. We also provide evidence that internal capital markets of multinational banks alleviate financial constraints faced by their foreign subsidiaries.

Keywords: Multinational bank; Internal capital market; Financial crisis (search for similar items in EconPapers)
JEL-codes: E44 F43 G21 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:28:y:2014:i:c:p:79-94

DOI: 10.1016/j.mulfin.2014.10.003

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