Abstract
Presumably, foreign banks open subsidiaries and branches to perform different tasks. This paper studies the balance sheet composition of subsidiary and branch banks, testing for differences across groups and periods. We use as laboratory of analysis the Luxembourg banking sector, which is composed mainly by foreign banks. Non-parametric methods yield several findings. First, specialisation and heterogeneity vary across years as well as across different market segments. Second, comparing subsidiaries and branches, estimated distributions across banks have been relatively similar for Interbank Loans but have become rather different for Interbank Deposits. For Customer Loans and Customer Deposits, the differences across groups are generally greater, especially for Customer Deposits. Third, in 2009 the financial crisis generally sharpened the differences between subsidiaries and branches for all variables considered. Fourth, long-term changes between 1995 and 2007 appeared to be (temporarily?) reversed between 2007 and 2009 by the financial crisis.