The Relative Profitability of International Banking Activities
The World of Banking, Vol. 3, No, 3, pp. 25-27, May-June 1984
4 Pages Posted: 7 Jun 2015 Last revised: 29 Dec 2015
Date Written: September 2, 2015
The conclusions of study are summarized as follows: (1) Banks manage some asset-related international banking activities (especially loans but also cash) less consistently and uniformly than liability-related and other international banking activities. (2) The identified category of international loan assets is significantly less profitable than its domestic counterpart. (3) The results of the study are generally consistent for each of the three years analyzed.
The apparent mismatch in the international aspects of the statement of condition (conclusion 1) may be due to differences in gap management, involving variable-rate assets and variable-rate liabilities. Conclusion 3 suggests general longitudinal consistency in the behavior of factors that account for most of the variability in management of international banking activities. For example, this result appears consistent with continuing repayment problems facing large banks in their loans in developing countries.
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