The Effect of Foreign Lending on Domestic Loans: An Analysis of U.S. Global Banks

Edith Liu and Jonathan Pogach

No 1198, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This paper examines the effect of foreign lending on the domestic lending for US global banks. We show that greater foreign loan growth complements, rather than detracts from, domestic commercial lending. Exploiting a confidential data (FFIEC 009) on international loan exposure of US banks, we estimate that a 1% increase in foreign office lending is associated with a 0.6% growth in domestic commercial lending, suggesting complementarity across these lending channels. However, when capital raising is tight during the Global Financial Crisis of 2008, we find that foreign lending did come at the expense of domestic lending.

Keywords: Multinational; Global Banking; Commercial Loans; Foreign Investments (search for similar items in EconPapers)
JEL-codes: F21 F23 F36 G21 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2017-02
New Economics Papers: this item is included in nep-ban
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: The effect of foreign lending on domestic loans: An analysis of US global banks (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:1198

DOI: 10.17016/IFDP.2017.1198

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