Multinational Bank Credit in Less Industrialized Economies

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Multinational bank loans have grown in emerging and transition economies in recent years. This paper looks at the determinants of multinational bank (MNB) loans for 72 countries from 1985 to 1998 using data from the Bank for International Settlements and the International Monetary Fund. We find that MNB loans are greater where MNB deposits are larger, where the past presence of MNBs has been larger, where better profit opportunities exist, where current account deficits are larger, where inflows of FDI are larger, and where the currency is more undervalued in real terms.