This paper studies how capital requirements influence a bank's mode of entry into foreign financial markets. We develop … a model of an internationally operating bank that creates and allocates liquidity across countries and argue that the … internal capital markets, on which a multinational bank relies to allocate liquidity across countries. Capital requirements …

financial turmoil, increasing global activity of banks was seen as a clear manifestation of financial and trade globalization …. World trade has been flat since 2008, while cross-border financial flows are nearly ten times less compared with the pre …' performance and capitalization. The paper suggests that even a restoring global economy will not return banks from the developed …