Are International Banks Different? : Evidence on Bank Performance and Strategy

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. The paper investigates whether international banks headquartered in developing countri...

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Main Authors:	Bertay, Ata Can, Demirguc-Kunt, Asli, Huizinga, Harry
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2017
Subjects:	BANKING INTERNATIONALIZATION SOUTH-SOUTH BANKING RISK-TAKING CYCLICALITY
Online Access:	http://documents.worldbank.org/curated/en/908851513693366704/Are-international-banks-different-evidence-on-bank-performance-and-strategy http://hdl.handle.net/10986/29078

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recordtype	oai_dc
spelling	okr-10986-290782021-06-08T14:42:47Z Are International Banks Different? : Evidence on Bank Performance and Strategy Bertay, Ata Can Demirguc-Kunt, Asli Huizinga, Harry BANKING INTERNATIONALIZATION SOUTH-SOUTH BANKING RISK-TAKING CYCLICALITY 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. The paper investigates whether international banks headquartered in developing countries behave and perform differently from those headquartered in high-income countries. The results show that, compared with domestic banks, international banks have lower valuations and achieve lower returns on equity in general. This suggests that, on average, bank internationalization has progressed beyond the point where it is in the interest of bank shareholders, potentially because of corporate governance failures and too-big-to-fail subsidies that accrue to large and complex banks. In contrast, developing country international banks seem to have benefited from internationalization compared with their high-income counterparts. Furthermore, for international banks headquartered in developing countries, bank internationalization reduces the cyclicality of their domestic credit growth with respect to domestic 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. 2017-12-21T20:57:48Z 2017-12-21T20:57:48Z 2017-12 Working Paper http://documents.worldbank.org/curated/en/908851513693366704/Are-international-banks-different-evidence-on-bank-performance-and-strategy http://hdl.handle.net/10986/29078 English Policy Research Working Paper;No. 8286 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	BANKING INTERNATIONALIZATION SOUTH-SOUTH BANKING RISK-TAKING CYCLICALITY
spellingShingle	BANKING INTERNATIONALIZATION SOUTH-SOUTH BANKING RISK-TAKING CYCLICALITY Bertay, Ata Can Demirguc-Kunt, Asli Huizinga, Harry Are International Banks Different? : Evidence on Bank Performance and Strategy
relation	Policy Research Working Paper;No. 8286
description	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. The paper investigates whether international banks headquartered in developing countries behave and perform differently from those headquartered in high-income countries. The results show that, compared with domestic banks, international banks have lower valuations and achieve lower returns on equity in general. This suggests that, on average, bank internationalization has progressed beyond the point where it is in the interest of bank shareholders, potentially because of corporate governance failures and too-big-to-fail subsidies that accrue to large and complex banks. In contrast, developing country international banks seem to have benefited from internationalization compared with their high-income counterparts. Furthermore, for international banks headquartered in developing countries, bank internationalization reduces the cyclicality of their domestic credit growth with respect to domestic 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.
format	Working Paper
author	Bertay, Ata Can Demirguc-Kunt, Asli Huizinga, Harry
author_facet	Bertay, Ata Can Demirguc-Kunt, Asli Huizinga, Harry
author_sort	Bertay, Ata Can
title	Are International Banks Different? : Evidence on Bank Performance and Strategy
title_short	Are International Banks Different? : Evidence on Bank Performance and Strategy
title_full	Are International Banks Different? : Evidence on Bank Performance and Strategy
title_fullStr	Are International Banks Different? : Evidence on Bank Performance and Strategy
title_full_unstemmed	Are International Banks Different? : Evidence on Bank Performance and Strategy
title_sort	are international banks different? : evidence on bank performance and strategy
publisher	World Bank, Washington, DC
publishDate	2017
url	http://documents.worldbank.org/curated/en/908851513693366704/Are-international-banks-different-evidence-on-bank-performance-and-strategy http://hdl.handle.net/10986/29078
_version_	1764468439614750720

Are International Banks Different? : Evidence on Bank Performance and Strategy

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