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To what extent will the banking industry be globalized? a study of bank nationality and reach in 20 European nations

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  • Allen N. Berger
  • Qinglei Dai
  • Steven Ongena
  • David C. Smith

Abstract

We model two dimensions of bank globalization -- bank nationality (a bank from the firm's host nation, its home nation, or a third nation) and bank reach (a global, regional, or local bank) -- using a two-stage nested multinomial logit model. Our data set includes over 2,000 foreign affiliates of multinational corporations operating in 20 European nations. We find that these firms frequently use host nation banks for cash management services, and that bank reach may be strongly influenced by this choice of bank nationality. Our results suggest limits to the degree of future bank globalization.

Suggested Citation

  • Allen N. Berger & Qinglei Dai & Steven Ongena & David C. Smith, 2002. "To what extent will the banking industry be globalized? a study of bank nationality and reach in 20 European nations," International Finance Discussion Papers 725, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgif:725
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    Banks and banking; International;

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