Template-Type: ReDIF-Paper 1.0
Author-Name: Ata Can Bertay
Author-X-Name-First: Ata Can
Author-X-Name-Last: Bertay
Author-Name: Asli Demirgüç-Kunt
Author-X-Name-First: Asli
Author-X-Name-Last: Kunt
Author-Name: Harry Huizinga
Author-X-Name-First: Harry
Author-X-Name-Last: Huizinga
Title: Are international banks different? Evidence on bank performance and strategy
Abstract: This paper provides evidence on how bank performance and strategies vary with the degree of bank internationalization, using data for 113 countries over 2000-15. Over this period, bank internationalization is associated with lower valuations and lower returns on equity. However, developing country banks that internationalized seem to have fared better than their high-income counterparts. Following the crisis, international banks were revalued particularly if they had stable funding in the form of deposits and if they had more generous deposit insurance coverage. Furthermore, for international banks headquartered in developing countries, our results indicate that bank internationalization reduces the cyclicality of their domestic credit growth with respect to home country gross domestic product growth, smoothing local downturns. In contrast, if the international bank is from a high-income country investing in a developing country, its lending is relatively procyclical, which can be destabilizing.
Length: 56 pages
Creation-Date: 2019-06
File-URL: https://www.bis.org/publ/work790.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work790.htm
File-Format: text/html
Number: 790
Classification-JEL: F36, G21, G28
Keywords: bank internationalization, financial crisis, deposit funding, procyclicality
Handle: RePEc:bis:biswps:790