Country Characteristics in Foreign Bank Investments and Risk Taking: The Role of Shared Culture, Common Institutions and Geographic Proximity

Ann Owen and Judit Temesvary

International Finance, 2015, vol. 18, issue 2, 227-248

Abstract: type="main" xml:lang="en">

We examine country characteristics in foreign bilateral banking relationships and explore how shared cultural heritage, common institutions and geographic proximity are related to banks’ foreign investment choices. Using a newly compiled data set on BIS-reporting banks’ activities, we find that proximity and common institutional arrangements are the primary correlates of bilateral bank portfolio allocations. Information flow as measured by cross-country phone calls is also strongly correlated with foreign bank investment, though the direction of causation is unclear. Trust between individuals in the two countries matters only as a proxy for other cultural similarities that are embedded in historical colonial relationships. We also find that the relationship between cross-country bank regulatory differences and bank investments has changed in the aftermath of the financial crisis.

Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/ (text/html)
Access to full text is restricted to subscribers.

Related works:
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:bla:intfin:v:18:y:2015:i:2:p:227-248

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1367-0271

Access Statistics for this article

International Finance is currently edited by Benn Steil

More articles in International Finance from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().