The determinants of U.S. banks’ international activities

Journal of Banking & Finance, 2014, vol. 44, issue C, 233-247

Abstract: This paper develops a model and structural dynamic estimation of bank behavior to map the relationship between U.S. banks’ choices of foreign banking activities, and bank and foreign market traits. This estimation framework is applied to a unique bank-level dataset compiled from regulatory sources, covering U.S. banks’ foreign activities in 83 host markets over the 2003–2013 period. Bank traits are better able to explain the evolving patterns of foreign banking than host market characteristics. After controlling for these traits, the post-financial crisis period shows a structural shift away from cross-border claims towards foreign affiliate activities. Structural estimates of foreign market entry costs and regulatory attitudes towards risk are derived. Simulation exercises confirm the strong impact of banks’ and regulators’ risk stance on bank profits and portfolio composition.

Keywords: International banking; Bank behavior; Affiliate lending; Cross-border lending; Bank regulation (search for similar items in EconPapers)
JEL-codes: C53 F37 G11 G15 G21 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:44:y:2014:i:c:p:233-247

DOI: 10.1016/j.jbankfin.2014.04.014

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