The Federal Reserve Board authorizes U.S. and foreign banking and financial organizations to establish Edge Act Corporations.
By virtue of historical developments and funding considerations, an Edge Act Corporation is a domestic subsidiary that is generally held by a U.S.
However an Edge Act Corporation may invest in any type of foreign company, as long as it does not engage in business in the United States, including making any domestic loans.
Major disadvantages of a Banking Edge, compared with an agency, are the smaller size of its loans (due to its smaller capital base, compared with that of the agency's parent bank) and the limitation of domestic lending ability to international or foreign business transactions.
In official documents, reference to an Edge Act Corporation typically mentions the state or city where it is domiciled.