Banking across borders

Friederike Niepmann

No 19/2013, Discussion Papers from Deutsche Bundesbank

Abstract: Banking across borders has risen substantially over the past two decades. Yet there is significant heterogeneity in the international and global activities of banks across countries. This paper develops and tests a theoretical model that explains this variation from an international trade theory perspective. In the model, banking across borders arises from differences in factor endowments and differences in banking sector efficiencies between countries. The paper shows how these differences determine banks' foreign asset and liability holdings as well as foreign direct investment in the banking sector. It highlights the differential effects of capital account and banking sector liberalization on banks' foreign positions and international capital flows. The model is consistent with major stylized facts on cross-border banking. The data strongly support its cross-sectional predictions.

Keywords: cross-border banking; international capital flows; trade in banking services (search for similar items in EconPapers)
JEL-codes: F21 F23 F34 G21 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-ban and nep-ifn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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Related works:
Journal Article: Banking across borders (2015)
Working Paper: Banking across Borders (2013)
Working Paper: Banking across borders (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bubdps:192013

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