The aspects and activities of international banking

Banking is an information based industry and banks develop relationships with and obtain information on their customers. Following them abroad, therefore, is a motivating factor for banks to continue providing banking services. Liberalization, international trade agreements and reduced trade barriers and more open markets have allowed banks to expand internationally. The range of services that a bank offers results from the strategy and is influenced from the sources of the bank. International banking is comprised of cross border banking services which can be provided through foreign offices to its home country and to third countries and it requires a foreign presence to originate the business and to deliver the service. The theories of international trade explain why firms, including banks, transact business internationally. While there are barriers to trade in all industries, the banking industry is particularly characterized by barriers to trade and establishment, restrictions on the ownership of banks and the type of business permitted mostly due to the industry’s role in economies. The paper is discussing the theories of international banking, but also the theories of international trade that needs to be applied for deeper explanation of international banking