Cultural distance and cross-border bank linkages

Thang Doan, Thanh Ha Le, Thanh To, Thi Nam Thang Truong and Thi Thanh Huyen Nguyen

Economic Systems, 2021, vol. 45, issue 1

Abstract: This study investigates the effect of cultural distance on global bank linkages using country-pair data for the period 1990–2013. We followed Schwartz (2006) to measure cultural distance, and employed the number of bank pairs involved in cross-border syndicated lending from the source to target countries as a measure of bank linkages. We found that cultural distance has a negative association with bank linkages. This effect is stronger in countries featuring higher informational asymmetries, as represented by weaker institutions, higher uncertainty, or revolution shocks. Our results hold even when employing alternative measures of bank linkages and cultural distance, and when considering the potential endogeneity of cultural distance.

Keywords: Cultural distance; Financial network; International banking; Uncertainty (search for similar items in EconPapers)
JEL-codes: F14 F15 F21 F32 F34 F36 F42 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:45:y:2021:i:1:s0939362521000029

DOI: 10.1016/j.ecosys.2021.100854

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