How do U.S. and Chinese regulators shape and compete over global banking? To answer this question, I hand-collect data on civil and criminal settlements across 45 jurisdictions. I show that U.S. regulators enforce the largest penalties and discipline bank activity, while Chinese regulators enforce the most numerous penalties and incentivize bank activity. This discrepancy in regulatory approaches carries negative consequences for the long-term dominance of U.S.-regulated banks. First, after settlements with US authorities related to sanctions, anti-money laundering, and bribery, banks reduce their total assets, net revenue, intra-financial liabilities, notional O.T.C. derivative contracts, syndicated lending, and payment processing in non-U.S.D. and non-home currencies. Second, in response to the contraction in syndicated lending, borrowers predominantly substitute with credit from Chinese banks. Third, Chinese regulators incentivize their banks to expand abroad by rewarding increased cross-border lending with smaller penalties. I present a multi-period model to jointly explain these facts. U.S. regulators must act strategically to preserve the global dominance of their banks.

This paper shows that state tax policy significantly affects the transmission of asset purchase programs into municipal bond prices. I establish two parameters that cross-sectionally determine yields: a state's top income tax rate and the aggregate wealth of the state's top 10% of households in net worth. Using the Federal Reserve's announcement of the Municipal Liquidity Facility in April 2020, I find that more segmented municipal markets react more to asset purchase program announcements by up to 21% relative to less segmented markets. I rationalize this finding in a calibrated theoretical model and show the existence of significant municipal bond segmentation, identified through Indiana’s institution of state tax shields in 2012.