We suggest that foreign banks may represent a trade-off for their developing country hosts. A portfolio model is developed to show that a more diversified international bank may be one of lower, overall risk and less susceptible to funding shocks but may react more to shocks that affect expected...

This paper studies the relationship between creditor protection and credit volatility. During the negative phase of the business cycle, credit contracts more in countries with poor creditor protection. For similar shocks to business conditions, credit is more volatile in countries where...