The resurgence of cultural borders during the financial crisis: The changing geography of Eurozone cross-border depositing

Harald Sander, Stefanie Kleimeier and Sylvia Heuchemer

Journal of Financial Stability, 2016, vol. 24, issue C, 12-26

Abstract: We investigate the impact of cultural borders on the geography of international finance during stable and crises times. We employ a unique data set that focuses on Eurozone cross-border depositing during the 1999–2011 period in a gravity-model framework. We find that cultural distance limits international financial integration over and above what can be expected from economic trade and transaction costs. While we provide evidence that cultural borders lost influence during a “Europhoria” phase after the introduction of Euro notes in 2002, our findings indicate that cultural borders resurge during the 2007/2008 financial crisis and severely limit financial integration.

Keywords: Culture; Financial crisis; Cross-border deposits; European single market; Gravity model (search for similar items in EconPapers)
JEL-codes: F36 G21 R12 Z10 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:24:y:2016:i:c:p:12-26

DOI: 10.1016/j.jfs.2016.04.003

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