The mix of international banks ' foreign claims : determinants and implications, Vol. 1 of 1

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

Author:	Herrero, Alicia Garcia; Martinez Peria, Maria Soledad;	Collection Title:	Policy, Research working paper ; no. WPS 3755
Country:	Italy; United States; World; Spain;	Date Stored:	2005/10/17
Document Date:	2005/10/01	Document Type:	Policy Research Working Paper
Language:	English	Region:	Rest Of The World; Europe and Central Asia; The World Region
Report Number:	WPS3755	SubTopics:	Financial Crisis Management & Restructuring; Banks & Banking Reform; Banking Law; Insurance & Risk Mitigation; Financial Intermediation
Volume No:	1 of 1

Summary: 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.


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