We study host state and source country credit markets' impact on cross-border M&As in the U.S. States attract a larger number and higher value cross-border M&A deals following interstate banking deregulation. We find a positive impact of source country financial depth on the incidence of cross-border M&As. We uncover a substitution effect between local and source country bank finance. The effects are larger for non-listed firms, cash transactions and for firms that are more dependent on external finance.