To What Extent Will the Banking Industry be Globalized? A Study of Bank Nationality and Reach in 20 European Nations.

This paper examines bank globalization along two dimensions--bank nationality and bank reach--using data on cash management services provided to foreign affiliates of large multinational corporations. The authors use a two-stage nested multinomial logit model with a data set including over 2,000 foreign affiliates of multinational corporations operating in 20 European nations. Results indicate 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. The authors' results suggest limits to the degree of future bank globalization. This working paper can be found at the United States Federal Reserve Board's International Finance Discussion Papers. You can access it by going to http://www.federalreserve.gov/pubs/ifdp/.