We analyze the cross-country determinants and financial stability implications of the mix of international banks’ foreign claims. We distinguish between local claims – extended by host country affiliates – and cross-border claims – booked outside the receiving country. Using data on Italian, Spanish, and US banks’ foreign claims, we find that the share of local claims is driven by restrictions on banking sector openness and by local scale economies/business opportunities. The impact of limits on property rights, entry requirements, start-up and informational costs is less robust. Finally, foreign claim volatility is lower in countries with a larger share of local claims.

This paper studies how firms from developed and developing countries have used domestic and international corporate bond markets since the 1990s. We find that debt issues in domestic and international markets have different characteristics. International issues tend to be larger, of shorter maturity, denominated in foreign currency, include more fixed rate contracts, and entail lower yields. These patterns persist even when analyzing issues by firms from countries with more developed domestic markets and higher financial integration and when comparing issues conducted by the same firm in different markets. These findings are consistent with the existence of frictions that segment domestic and international corporate bond markets and with these markets providing distinct financial services.

The COVID-19 pandemic could result in large government interventions in the banking industry. To shed light on the possible consequences on markups, we rely on the experience of the Global Financial Crisis and exploit granular data on government interventions in more than 800 banks across 27 countries between 2007 and 2017. Using a multivariate matching method, we find no evidence of an increase in markups. Interventions—especially longer and larger ones—have no significant impact on prices but they increase costs, mostly because of higher loan impairment charges, lowering markups.