The Role of Foreign Banks in Trade
Stijn Claessens (),
Omar Hassib and
Neeltje Van Horen ()
No 11821, CEPR Discussion Papers from C.E.P.R. Discussion Papers
This paper provides new insights into how financial globalization relates to international trade. Exploiting unique, time-varying, bilateral data on foreign bank ownership for many countries, we show that greater local foreign bank presence, especially from the importing country, is associated with higher exports in sectors more dependent on external finance. The association, which only arises for emerging markets, is stronger when these countries' institutions are weaker. The presence of a bank from the importing country is also associated with higher exports in sectors with more opaque products. Results are robust to controlling for domestic financial development and a full set of fixed effects. An event study confirms findings and shows impacts to be more pronounced when a foreign bank enters through an M&A. Imports also increase after entry, but less so. Overall, results suggest that foreign banks facilitate trade by increasing the availability of external finance and helping overcome information asymmetries.
Keywords: credit constraints; Financial Development; foreign banks; International Trade (search for similar items in EconPapers)
JEL-codes: F14 F15 F21 F36 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at email@example.com
Working Paper: The role of foreign banks in trade (2017)
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:cpr:ceprdp:11821
Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... rs/dp.php?dpno=11821
Access Statistics for this paper
More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ..
Bibliographic data for series maintained by (). This e-mail address is bad, please contact .