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A network perspective on international banking integration

Iván Arribas (), Francisco Perez () and Emili Tortosa-Ausina ()

Journal of Policy Modeling, 2011, vol. 33, issue 6, 831-851

Abstract: The aim of this article is to develop new international banking integration indicators together with their components: openness and regularity (balance) of the bilateral bank flows. We define the Standard of Perfect Banking Integration (SPBI), which characterizes the scenario attainable when bank flows are not geographically biased, and cross-border asset trade is not affected by home bias. We assess the gap between a hypothetical scenario of geographic neutrality and the current level of banking integration, along with both of its components. The empirical application to the banking systems of 23 countries over the 2003–2009 period enables us to conclude that the level of banking integration has advanced rapidly over the last few years and, according to our indicators, is close to 45% as of 2009, i.e., we are not halfway to the SPBI. However, notable differences among countries are both persistent and growing, and the integration level achieved for each banking system differs when either assessed from the bank inflows or outflows perspective.

Keywords: Banking integration; Geographic neutrality; Network analysis (search for similar items in EconPapers)
JEL-codes: F15 F21 F36 Z13 (search for similar items in EconPapers)
Date: 2011
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DOI: 10.1016/j.jpolmod.2011.08.007

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Handle: RePEc:eee:jpolmo:v:33:y:2011:i:6:p:831-851