The Impact of the Global Financial Crisis on Banking Globalization

Although cross-border lending has fallen sharply since the crisis, foreign bank presence-that is, "brick-and-mortar" operations-declined much less. While OECD banks reduced their presence (though they still control 89 percent of foreign banks' assets), non-OECD banks more than doubled theirs. Banks from countries facing systemic crises exited (more distant) markets and curtailed their subsidiaries' growth. Banks were more likely to sell smaller, more recent investments and enter closer and more important trading partners, shunning crisis and euro area countries. Lending locally grew more than cross-border claims did, but related to different factors. Altogether, the paper shows that global banking is not becoming more fragmented, but rather going through some important structural transformations with a greater variety of players and a more regional focus.