The effect of banking regulation on cross-border lending

Jarko Fidrmuc and Christa Hainz

Journal of Banking & Finance, 2013, vol. 37, issue 5, 1310-1322

Abstract: Banking regulations often differ between countries: Some regulators require banks to document their evaluation of firms’ creditworthiness, which determines the banks’ choice of lending technology. In a theoretical model, we study how differences in regulation influence competition between domestic and foreign banks and analyze the effect of regulatory harmonization on cross-border lending. We predict that lending rates are lower and access to credit is easier for firms in a border region if the national regulations differ. Using unique bank- and firm-level data from Germany, we show that firms in a border region have better access to credit if regulation differs.

Keywords: Bank regulations; Cross-border lending; SMEs; Difference-in-difference estimation (search for similar items in EconPapers)
JEL-codes: F23 G18 G21 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0378426612002713
Full text for ScienceDirect subscribers only

Related works:
Working Paper: The Effect of Banking Regulation on Cross-Border Lending (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:37:y:2013:i:5:p:1310-1322

DOI: 10.1016/j.jbankfin.2012.09.007

Access Statistics for this article

Journal of Banking & Finance is currently edited by Ike Mathur

More articles in Journal of Banking & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().