Foreign banks and trade
Stijn Claessens () and
Neeltje Van Horen ()
Journal of Financial Intermediation, 2021, vol. 45, issue C
Exploiting unique, time-varying, bilateral data on bank ownership for many countries, we show that exports tend to be larger when a foreign bank from the importing country is present. Entry of a foreign bank also boosts export growth to the home country of the foreign bank relative to other countries, especially when foreign bank presence in the country is large and bilateral cross-border lending low. We find supportive evidence that foreign banks facilitate trade by reducing financial frictions for firms. Entry spurs exports to the foreign bank's home country especially in sectors more dependent on external finance, and particularly so in countries less economically and financially developed and with a higher share of foreign banks. Imports of external finance dependent sectors also grow more after entry, but less so than exports do. Exit of a foreign bank does not fully eliminate the beneficial effects of prior foreign bank presence on exports.
Keywords: Foreign banks; International trade; Credit constraints; Financial development (search for similar items in EconPapers)
JEL-codes: F14 F15 F21 F36 G21 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:45:y:2021:i:c:s1042957320300103
Access Statistics for this article
Journal of Financial Intermediation is currently edited by Elu von Thadden
More articles in Journal of Financial Intermediation from Elsevier
Bibliographic data for series maintained by Catherine Liu ().