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Internal capital markets and lending by multinational bank subsidiaries

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  • de Haas, Ralph
  • van Lelyveld, Iman

Abstract

We use new panel data on the intra-group ownership structure and the balance sheets of 45 of the largest multinational bank holdings to analyze what determines the credit growth of their subsidiaries. We find evidence for the existence of internal capital markets through which multinational banks manage the credit growth of their subsidiaries. Multinational bank subsidiaries with financially strong parent banks are able to expand their lending faster. As a result of parental support, foreign bank subsidiaries also do not need to rein in their credit supply during a financial crisis, while domestic banks need to do so.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Financial Intermediation.

Volume (Year): 19 (2010)
Issue (Month): 1 (January)
Pages: 1-25

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Handle: RePEc:eee:jfinin:v:19:y:2010:i:1:p:1-25

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Web page: http://www.elsevier.com/locate/inca/622875

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Keywords: Multinational banks Credit supply Internal capital markets Financial crisis;

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Interesting readings
    by Ajay Shah in Ajay Shah's blog on 2010-07-16 02:08:00
  2. Hoe shockproof zijn internationale banken? Lessen van de vorige storm
    by Ralph de Haas, Iman van Lelyveld in Me Judice on 2011-12-15 12:00:00
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