Do banks follow their customers abroad?
AbstractThe market share of U.S. business loans made by foreign-owned banks has increased dramatically since 1980. At the same time, foreign direct investment in the U.S. rose, so that much of the increase in foreign-owned U.S.-based bank lending to businesses in the U.S. could conceivably be accounted for by an increase in loans to the U.S. affiliates of firms headquartered abroad, an expectation in line with the conventional wisdom that bans "follow their customers" abroad. Our study investigates the lending patterns of U.S.-based banks from Japan, Canada, France, Germany, the Netherlands, and the U.K., countries which account for the vast majority of foreign-owned bank activity in the U.S. Simultaneously, we look at the borrowing patterns of U.S. nonbank affiliates of firms from those countries. We find that banks from four of the six countries (Japan, Canada, the Netherlands, and the U.K.) allocated a majority of their loans to non-home country borrowers, for some or all of the 1981-92 period. That result suggests that the "follow the customer" hypothesis may have a more limited applicability than previously supposed.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Federal Reserve Bank of New York in its series Research Paper with number 9620.
Date of creation: 1996
Date of revision:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hultman, Charles W. & Randolph McGee, L., 1989. "Factors affecting the foreign banking presence in the U.S," Journal of Banking & Finance, Elsevier, Elsevier, vol. 13(3), pages 383-396, July.
- Hoshi, Takeo & Kashyap, Anil & Scharfstein, David, 1991.
"Corporate Structure, Liquidity, and Investment: Evidence from Japanese Industrial Groups,"
The Quarterly Journal of Economics, MIT Press,
MIT Press, vol. 106(1), pages 33-60, February.
- Takeo Hoshi & Anil Kashyap & David Scharfstein, 1989. "Corporate structure, liquidity, and investment: evidence from Japanese industrial groups," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 82, Board of Governors of the Federal Reserve System (U.S.).
- repec:sae:niesru:v:145:y::i:1:p:43-63 is not listed on IDEAS
- Chan Huh & Sun Bae Kim, 1994. "How bad is the "bad loan problem" in Japan?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, Federal Reserve Bank of San Francisco, issue sep23.
- Goldberg, Lawrence G & Saunders, Anthony, 1980. "The Causes of U.S. Bank Expansion Overseas: The Case of Great Britain," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 12(4), pages 630-43, November.
- Sun Bae Kim & Ramon Moreno, 1994.
"Stock prices and bank lending behavior in Japan,"
FRBSF Economic Letter, Federal Reserve Bank of San Francisco,
Federal Reserve Bank of San Francisco, issue feb11.
- George Budzeika, 1991. "Determinants of the growth of foreign banking assets in the United States," Research Paper, Federal Reserve Bank of New York 9112, Federal Reserve Bank of New York.
- Sun Bae Kim, 1992. "Agency costs and the firm's ownership structure: the Japanese evidence," Proceedings 380, Federal Reserve Bank of Chicago.
- Flath, David, 1993. "Shareholding in the Keiretsu, Japan's Financial Groups," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 249-57, May.
- Goldberg, Lawrence G. & Saunders, Anthony, 1981. "The determinants of foreign banking activity in the United States," Journal of Banking & Finance, Elsevier, Elsevier, vol. 5(1), pages 17-32, March.
- Grosse, Robert & Goldberg, Lawrence G., 1991. "Foreign bank activity in the United States: An analysis by country of origin," Journal of Banking & Finance, Elsevier, Elsevier, vol. 15(6), pages 1093-1112, December.
- Gary C. Zimmerman, 1989. "The growing presence of Japanese banks in California," Economic Review, Federal Reserve Bank of San Francisco, issue Sum, pages 3-17.
- Edward M. Graham & Paul Krugman, 1995. "Foreign Direct Investment in the United States, 3rd Edition," Peterson Institute Press: All Books, Peterson Institute for International Economics, Peterson Institute for International Economics, number 52, July.
- Gray, Jean M. & Gray, H. Peter, 1981. "The multinational bank: A financial MNC?," Journal of Banking & Finance, Elsevier, Elsevier, vol. 5(1), pages 33-63, March.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Amy Farber).
If references are entirely missing, you can add them using this form.