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The mix of international banks'foreign claims : determinants and implications

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  • Herrero, Alicia Garcia
  • Martinez Peria, Maria Soledad

Abstract

The authors analyze the determinants and implications for financial stability of the mix of international banks'claims countries receive. In particular, they distinguish between local claims, extended by international banks through their affiliates in a host (or claim recipient) country, and cross-border claims, booked from outside the host country, typically from banks'headquarters in their home countries. Using data on U.S., Spanish, and Italian banks'foreign claims across countries, the authors find that the share of local foreign claims is primarily driven by the degree of"freedom"in the host banking sector and by business opportunities in the local market. Entry requirements, startup and informational costs associated with international banking also play a role, but their influence is less robust. Finally, they find that the mix of international bank claims has implications for financial stability, since foreign claim volatility is lower in countries that receive a larger share of local claims.

Suggested Citation

  • Herrero, Alicia Garcia & Martinez Peria, Maria Soledad, 2005. "The mix of international banks'foreign claims : determinants and implications," Policy Research Working Paper Series 3755, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3755
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    Cited by:

    1. Suk-Joong Kim & Eliza Wu, 2018. "International Bank Flows to Emerging Markets: Influence of Sovereign Credit Ratings and Their Regional Spillover Effects," World Scientific Book Chapters,in: Information Spillovers and Market Integration in International Finance Empirical Analyses, chapter 14, pages 467-515 World Scientific Publishing Co. Pte. Ltd..
    2. Müller, Oliver & Uhde, André, 2013. "Cross-border bank lending: Empirical evidence on new determinants from OECD banking markets," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 23(C), pages 136-162.
    3. Mejra Festić, 2011. "The role of the foreign banks in the 5 EU member states," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 13(1), pages 189-206, June.
    4. Niepmann, Friederike, 2015. "Banking across borders," Journal of International Economics, Elsevier, vol. 96(2), pages 244-265.
    5. Sophie Brana & Delphine Lahet, 2011. "Foreign banks and the stability of foreign and domestic credit in CEECs," Working Papers hal-00637686, HAL.
    6. repec:oup:revfin:v:21:y:2017:i:4:p:1513-1555. is not listed on IDEAS
    7. Mahmoud Haddad & Sam Hakim, 2010. "Have Foreign Banks Contributed to the Spread of the Global Financial Crisis to Saudi Arabia?," Working Papers 537, Economic Research Forum, revised 08 Jan 2010.
    8. Beck, Thorsten, 2006. "Creating an efficient financial system : challenges in a global economy," Policy Research Working Paper Series 3856, The World Bank.
    9. Patrick McGuire & Nikola Tarashev, 2008. "Bank health and lending to emerging markets," BIS Quarterly Review, Bank for International Settlements, December.
    10. Luis J. Álvarez & Emmanuel Dhyne & Marco Hoeberichts & Claudia Kwapil & Hervé Le Bihan & Patrick Lünnemann & Fernando Martins & Roberto Sabbatini & Harald Stahl & Philip Vermeulen & Jouko Vilmunen, 2006. "Sticky Prices in the Euro Area: A Summary of New Micro-Evidence," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 575-584, 04-05.
    11. Sabine Herrmann & Dubravko Mihaljek, 2010. "The determinants of cross-border bank flows to emerging markets: new empirical evidence on the spread of financial crises," BIS Working Papers 315, Bank for International Settlements.
    12. Stijn Claessens, 2006. "Competitive Implications of Cross-Border Banking," World Scientific Book Chapters,in: Cross-Border Banking Regulatory Challenges, chapter 11, pages 151-181 World Scientific Publishing Co. Pte. Ltd..
    13. Reza Y Siregar & Keen Meng Choy, 2010. "Determinants of International Bank Lending from the Developed World to East Asia," IMF Staff Papers, Palgrave Macmillan, vol. 57(2), pages 484-516, June.
    14. Annick Pamen Nyola & Alain Sauviat & Amine Tarazi, 2017. "How Does Regulation Affect the Organizational Form of Banks' Presence in Developing and Developed Countries?," Working Papers hal-01369658, HAL.
    15. Kodongo, Odongo & Natto, Dinah & Biekpe, Nicholas, 2015. "Explaining cross-border bank expansion in East Africa," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 36(C), pages 71-84.
    16. Stijn Claessens, 2017. "Global Banking: Recent Developments and Insights from Research," Review of Finance, European Finance Association, vol. 21(4), pages 1513-1555.
    17. repec:bla:sajeco:v:85:y:2017:i:1:p:3-27 is not listed on IDEAS
    18. Haakon Kavli & Nicola Viegi, 2017. "Are Determinants of Portfolio Flows Always the Same? - South African Results from a Time Varying Parameter Var Model," South African Journal of Economics, Economic Society of South Africa, vol. 85(1), pages 3-27, March.
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    24. Lehner, Maria, 2008. "Entry Mode Choice of Multinational Banks," Discussion Papers in Economics 8222, University of Munich, Department of Economics.
    25. Lorenzo Esposito, 2014. "Con Annibale alle porte. L'internazionalizzazione del sistema bancario e il caso italiano," Moneta e Credito, Economia civile, vol. 67(266), pages 311-338.

    More about this item

    Keywords

    Banks&Banking Reform; Financial Intermediation; Insurance&Risk Mitigation; Financial Crisis Management&Restructuring; Banking Law;

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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