THE STRUCTURE OF INTERNATIONAL BANKING

This paper investigates the factors that determine the number and form of foreign banking operations from 60 foreign countries in the United States. Our equilibrium model of three banking forms (representative offices, agencies and branches) and three explanatory variables (export activity, merchant banking activity, and capital market development) explains more than 74 per cent of the variation in numbers of offices across the 60 different foreign countries. In addition, we identify the equilibrium model of competition among the types of operations that is most consistent with the empirical results. (JEL F33).