The extension of international credit by US banks: a disaggregated analysis, 1988–1994

Abstract

We use simultaneous equation estimation techniques to analyze decisions made by 35 US banks with respect to credit extended domestically and to credit extended within 16 foreign countries, 1988–1994. Our results indicate that foreign credit extension by US banks follows the commercial expansion of US businesses abroad and is greater in countries with expanding economies. They are inconsistent with the notion that banks trade off credit activities undertaken domestically and abroad.