How Banks Go Abroad : Branches or Subsidiaries?

The authors examine the factors that influence banks' type of organizational form when operating in foreign markets using an original database of the branches and subsidiaries in Latin America and Eastern Europe of the top 100 international banks. They find that regulation, taxation, the degree...

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Main Authors:	Cerutti, Eugenio, Dell'Ariccia, Giovanni, Martínez Pería, Maria Soledad
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	AFFILIATE AFFILIATES BALANCE SHEETS BANK ASSETS BANK BRANCHES BANK LENDING BANK MERGERS BANKING SECTOR BANKING SERVICES BANKING SYSTEM BANKING SYSTEMS BANKS BILATERAL TRADE CENTRAL BANKS COMMERCIAL BANKS CONTRACTUAL ARRANGEMENTS CORPORATE GOVERNANCE DEBT DEPOSITORS DEVALUATION DEVELOPMENT ECONOMICS ECONOMIC RISK ECONOMICS EMERGING ECONOMIES EMERGING MARKET ECONOMIES EMERGING MARKETS EMPIRICAL ANALYSIS FEDERAL RESERVE BANK OF BOSTON FEDERAL RESERVE BANK OF NEW YORK FINANCIAL DISTRESS FINANCIAL INFORMATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL SYSTEMS FOREIGN BANKS FOREIGN ENTRY FOREIGN EXCHANGE FRAUD FUTURE RESEARCH GDP GDP PER CAPITA GLOBALIZATION GOVERNMENT INTERVENTION INFLATION INFLATION RATE INSURANCE INTERNATIONAL BANKS INVESTMENT BANKING INVESTMENT BANKS LATIN AMERICAN LAWS LEGAL PROVISIONS LEGISLATION LENDING BEHAVIOR LIABILITY MUTUAL FUND MUTUAL FUNDS ORGANIZATIONAL FORM PER CAPITA INCOME REAL GDP RESERVE REQUIREMENTS RISK MANAGEMENT SAVINGS SECURITIES SHAREHOLDERS SUBSIDIARIES SUBSIDIARY TAXATION
Online Access:	http://documents.worldbank.org/curated/en/2005/10/6350102/banks-abroad-branches-or-subsidiaries http://hdl.handle.net/10986/8536

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spelling	okr-10986-85362021-04-23T14:02:43Z How Banks Go Abroad : Branches or Subsidiaries? Cerutti, Eugenio Dell'Ariccia, Giovanni Martínez Pería, Maria Soledad AFFILIATE AFFILIATES BALANCE SHEETS BANK ASSETS BANK BRANCHES BANK LENDING BANK MERGERS BANKING SECTOR BANKING SERVICES BANKING SYSTEM BANKING SYSTEMS BANKS BILATERAL TRADE CENTRAL BANKS COMMERCIAL BANKS CONTRACTUAL ARRANGEMENTS CORPORATE GOVERNANCE DEBT DEPOSITORS DEVALUATION DEVELOPMENT ECONOMICS ECONOMIC RISK ECONOMICS EMERGING ECONOMIES EMERGING MARKET ECONOMIES EMERGING MARKETS EMPIRICAL ANALYSIS FEDERAL RESERVE BANK OF BOSTON FEDERAL RESERVE BANK OF NEW YORK FINANCIAL DISTRESS FINANCIAL INFORMATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL SYSTEMS FOREIGN BANKS FOREIGN ENTRY FOREIGN EXCHANGE FRAUD FUTURE RESEARCH GDP GDP PER CAPITA GLOBALIZATION GOVERNMENT INTERVENTION INFLATION INFLATION RATE INSURANCE INTERNATIONAL BANKS INVESTMENT BANKING INVESTMENT BANKS LATIN AMERICAN LAWS LEGAL PROVISIONS LEGISLATION LENDING BEHAVIOR LIABILITY MUTUAL FUND MUTUAL FUNDS ORGANIZATIONAL FORM PER CAPITA INCOME REAL GDP RESERVE REQUIREMENTS RISK MANAGEMENT SAVINGS SECURITIES SHAREHOLDERS SUBSIDIARIES SUBSIDIARY TAXATION The authors examine the factors that influence banks' type of organizational form when operating in foreign markets using an original database of the branches and subsidiaries in Latin America and Eastern Europe of the top 100 international banks. They find that regulation, taxation, the degree of desired penetration in the local market, and host-country economic and political risks matter. Banks are more likely to operate as branches in countries that have higher corporate taxes and when they face lower regulatory restrictions on bank entry, in general, and on foreign branches, in particular. Subsidiaries are the preferred organizational form by banks that seek to penetrate the local market establishing large and mostly retail operations. Finally, there is evidence that economic and political risks have opposite effects on the type of organizational form, suggesting that legal differences in the degree of parent bank responsibility vis-à-vis branches and subsidiaries under different risk scenarios play an important role in the kind of operations international banks maintain overseas 2012-06-20T17:50:17Z 2012-06-20T17:50:17Z 2005-10 http://documents.worldbank.org/curated/en/2005/10/6350102/banks-abroad-branches-or-subsidiaries http://hdl.handle.net/10986/8536 English Policy Research Working Paper; No. 3753 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean Europe and Central Asia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	AFFILIATE AFFILIATES BALANCE SHEETS BANK ASSETS BANK BRANCHES BANK LENDING BANK MERGERS BANKING SECTOR BANKING SERVICES BANKING SYSTEM BANKING SYSTEMS BANKS BILATERAL TRADE CENTRAL BANKS COMMERCIAL BANKS CONTRACTUAL ARRANGEMENTS CORPORATE GOVERNANCE DEBT DEPOSITORS DEVALUATION DEVELOPMENT ECONOMICS ECONOMIC RISK ECONOMICS EMERGING ECONOMIES EMERGING MARKET ECONOMIES EMERGING MARKETS EMPIRICAL ANALYSIS FEDERAL RESERVE BANK OF BOSTON FEDERAL RESERVE BANK OF NEW YORK FINANCIAL DISTRESS FINANCIAL INFORMATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL SYSTEMS FOREIGN BANKS FOREIGN ENTRY FOREIGN EXCHANGE FRAUD FUTURE RESEARCH GDP GDP PER CAPITA GLOBALIZATION GOVERNMENT INTERVENTION INFLATION INFLATION RATE INSURANCE INTERNATIONAL BANKS INVESTMENT BANKING INVESTMENT BANKS LATIN AMERICAN LAWS LEGAL PROVISIONS LEGISLATION LENDING BEHAVIOR LIABILITY MUTUAL FUND MUTUAL FUNDS ORGANIZATIONAL FORM PER CAPITA INCOME REAL GDP RESERVE REQUIREMENTS RISK MANAGEMENT SAVINGS SECURITIES SHAREHOLDERS SUBSIDIARIES SUBSIDIARY TAXATION
spellingShingle	AFFILIATE AFFILIATES BALANCE SHEETS BANK ASSETS BANK BRANCHES BANK LENDING BANK MERGERS BANKING SECTOR BANKING SERVICES BANKING SYSTEM BANKING SYSTEMS BANKS BILATERAL TRADE CENTRAL BANKS COMMERCIAL BANKS CONTRACTUAL ARRANGEMENTS CORPORATE GOVERNANCE DEBT DEPOSITORS DEVALUATION DEVELOPMENT ECONOMICS ECONOMIC RISK ECONOMICS EMERGING ECONOMIES EMERGING MARKET ECONOMIES EMERGING MARKETS EMPIRICAL ANALYSIS FEDERAL RESERVE BANK OF BOSTON FEDERAL RESERVE BANK OF NEW YORK FINANCIAL DISTRESS FINANCIAL INFORMATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL SYSTEMS FOREIGN BANKS FOREIGN ENTRY FOREIGN EXCHANGE FRAUD FUTURE RESEARCH GDP GDP PER CAPITA GLOBALIZATION GOVERNMENT INTERVENTION INFLATION INFLATION RATE INSURANCE INTERNATIONAL BANKS INVESTMENT BANKING INVESTMENT BANKS LATIN AMERICAN LAWS LEGAL PROVISIONS LEGISLATION LENDING BEHAVIOR LIABILITY MUTUAL FUND MUTUAL FUNDS ORGANIZATIONAL FORM PER CAPITA INCOME REAL GDP RESERVE REQUIREMENTS RISK MANAGEMENT SAVINGS SECURITIES SHAREHOLDERS SUBSIDIARIES SUBSIDIARY TAXATION Cerutti, Eugenio Dell'Ariccia, Giovanni Martínez Pería, Maria Soledad How Banks Go Abroad : Branches or Subsidiaries?
geographic_facet	Latin America & Caribbean Europe and Central Asia
relation	Policy Research Working Paper; No. 3753
description	The authors examine the factors that influence banks' type of organizational form when operating in foreign markets using an original database of the branches and subsidiaries in Latin America and Eastern Europe of the top 100 international banks. They find that regulation, taxation, the degree of desired penetration in the local market, and host-country economic and political risks matter. Banks are more likely to operate as branches in countries that have higher corporate taxes and when they face lower regulatory restrictions on bank entry, in general, and on foreign branches, in particular. Subsidiaries are the preferred organizational form by banks that seek to penetrate the local market establishing large and mostly retail operations. Finally, there is evidence that economic and political risks have opposite effects on the type of organizational form, suggesting that legal differences in the degree of parent bank responsibility vis-à-vis branches and subsidiaries under different risk scenarios play an important role in the kind of operations international banks maintain overseas
format	Publications & Research :: Policy Research Working Paper
author	Cerutti, Eugenio Dell'Ariccia, Giovanni Martínez Pería, Maria Soledad
author_facet	Cerutti, Eugenio Dell'Ariccia, Giovanni Martínez Pería, Maria Soledad
author_sort	Cerutti, Eugenio
title	How Banks Go Abroad : Branches or Subsidiaries?
title_short	How Banks Go Abroad : Branches or Subsidiaries?
title_full	How Banks Go Abroad : Branches or Subsidiaries?
title_fullStr	How Banks Go Abroad : Branches or Subsidiaries?
title_full_unstemmed	How Banks Go Abroad : Branches or Subsidiaries?
title_sort	how banks go abroad : branches or subsidiaries?
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2005/10/6350102/banks-abroad-branches-or-subsidiaries http://hdl.handle.net/10986/8536
_version_	1764407988084277248

How Banks Go Abroad : Branches or Subsidiaries?

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