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

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  • Jeon, Bang Nam
  • Wu, Ji

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.

Suggested Citation

  • Jeon, Bang Nam & Wu, Ji, 2014. "Global banks and internal capital markets: Evidence from bank-level panel data in emerging economies," Journal of Multinational Financial Management, Elsevier, vol. 28(C), pages 79-94.
    • Handle: RePEc:eee:mulfin:v:28:y:2014:i:c:p:79-94
    DOI: 10.1016/j.mulfin.2014.10.003
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    Cited by:

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    3. Ashraf, Badar Nadeem & Arshad, Sidra, 2017. "Foreign bank subsidiaries’ risk-taking behavior: Impact of home and host country national culture," Research in International Business and Finance, Elsevier, vol. 41(C), pages 318-335.
    4. Wu, Ji & Chen, Minghua & Jeon, Bang Nam & Wang, Rui, 2017. "Does foreign bank penetration affect the risk of domestic banks? Evidence from emerging economies," Journal of Financial Stability, Elsevier, vol. 31(C), pages 45-61.

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    More about this item

    Keywords

    Multinational bank; Internal capital market; Financial crisis;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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