Bank internationalization and trade: What comes first?

Giovanni Ferri and Alberto Pozzolo

No 11, Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences

Abstract: We study the dynamic nexus that changes in foreign bank penetration have with changes in trade and FDI between some selected OECD countries and Central and Eastern Europe countries (CEECs). Following the literature, we contemplate the possibility that such a nexus might differ depending on whether foreign bank entry materializes through the opening of branches or by acquiring local subsidiaries. The question that we try to answer is whether bank internationalization led or followed the increase in trade and manufacturing FDI. Using data on the changes in the bilateral linkages between OECD origin countries and CEECs target countries between 1995 and 2002, we find only one strong link, going from the share of bilateral trade over total trade from the country of origin, which we define a "push factor", to the change in the presence of foreign branches. The link from trade to bank acquisition of foreign subsidiaries is instead much weaker. In addition, we find some evidence that the share of bilateral trade over total trade with the target country, which we define a "pull factor", affects bank internationalization through the acquisition of subsidiaries, but not through the opening of branches.

Pages: 26
Date: 2009-01
New Economics Papers: this item is included in nep-eec and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://docs.dises.univpm.it/web/quaderni/pdfmofir/Mofir011.pdf First version, 2009 (application/pdf)

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:anc:wmofir:11

Access Statistics for this paper

More papers in Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences Contact information at EDIRC.
Bibliographic data for series maintained by Maurizio Mariotti (maurizio.mariotti@univpm.it).