A Model of International Trade in Banking Services

David VanHoose

Open Economies Review, 2013, vol. 24, issue 4, 613-625

Abstract: This paper combines essential elements of the theory of intra-industry international trade with an imperfect-competition banking framework to develop a model of intra-industry international trade in banking services. The model yields the prediction that if, for instance, the production of lending services is labor intensive while the provision of deposit services is physical-capital-intensive, banks located in a foreign nation with a relatively larger labor endowment will export lending services while banks based in a domestic country with a relatively larger endowment of physical capital will export deposit services. These efficiency-based trade flows indicate that domestic borrowers and savers will be net recipients of credit and deposits, respectively, with foreign banks obtaining funds that permit them to act as net lenders to the domestic nation by borrowing from domestic banks in a global wholesale interbank funds market. A key implication of the model, therefore, is that attainment of profit-maximizing intra-industry flows of banking-service trade requires the smooth functioning of this interbank market. Copyright Springer Science+Business Media New York 2013

Keywords: Trade in banking services; International banking; G21; F12 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1007/s11079-012-9265-1 (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:kap:openec:v:24:y:2013:i:4:p:613-625

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/11079/PS2

DOI: 10.1007/s11079-012-9265-1

Access Statistics for this article

Open Economies Review is currently edited by G.S. Tavlas

More articles in Open Economies Review from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().