Objective:
A lot of literature has been involved with the identification of the determinants and the effects of financial crises considering this issue under many different perspectives and now new theories have been proved about how a banking crisis should be recognised and hopefully predicted.
On the banking side some specific studies have focused on single countries (i.e. Malaysian case) trying to evaluate the different effect of a crisis on foreign and domestic banks and explain their different behaviour during periods of financial distress.
This work provides a bridge between the recent insights of the literature on banking crisis that indentifies new “theory based indicators” to predict the arrival of the turmoil and the efforts that has been put in indentifying the different reaction -if there are any- of foreign and domestic when a banking crisis occur.

Data and Methods:
I built a unique dataset made of two main sources. The first source is Bank Scope for data about the balance sheet indicators of a rich sample of banks from many different countries while the second block of data refers to the innovative and “theory based” crisis indicators that I have built on data from the International Monetary Fund and World Bank.
The empirical framework consists of the “difference in differences” methodology, where the “treatment group” is the group of foreign banks within a country, the control group national banks within the same country and the “treatment” to which both the treatment and the control group are subject is the occurrence of a banking crisis identified through this new “theory based indicators”.

Results:
Foreign banks are shown to suffer less from a banking crisis than their domestic counterparts and the “theory based indicators” seem to uniquely identify this final outcome.
This could be due from a higher strength –ex ante- on the balance sheet side that makes foreign banks able to better face the crisis registering less negative effects than their domestic counterparts, or to a higher level of financial resources –ex post- that foreign banks can count on.