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Are Banks Different? Evidence from International Data

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  • Buch, Claudia M

Abstract

International capital flows have become increasingly disintermediated, and this trend is particularly pronounced for developed countries. This paper briefly summarizes the theoretical literature on the choice between bank debt and bond finance and argues that the trend towards disintermediation of financial services can be explained with declining information costs. Two new datasets on bilateral cross-border bank claims and bond holdings are used to test the implications of the model. I find that the state of development of an economy, as an indirect measure of information costs, lowers the share of bank finance. The geographical distance between a lender and a borrower has a negative impact on the share of bank finance. Copyright 2002 by Blackwell Publishers Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal International Finance.

Volume (Year): 5 (2002)
Issue (Month): 1 (Spring)
Pages: 97-114

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Handle: RePEc:bla:intfin:v:5:y:2002:i:1:p:97-114

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  1. Maurice Obstfeld and Kenneth Rogoff., 2000. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," Center for International and Development Economics Research (CIDER) Working Papers C00-112, University of California at Berkeley.
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  8. Rajan, Raghuram G, 1992. " Insiders and Outsiders: The Choice between Informed and Arm's-Length Debt," Journal of Finance, American Finance Association, vol. 47(4), pages 1367-400, September.
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Cited by:
  1. Galina Hale, 2007. "Bonds or Loans? the Effect of Macroeconomic Fundamentals," Economic Journal, Royal Economic Society, vol. 117(516), pages 196-215, 01.
  2. Barry Eichengreen & Pipat Luengnaruemitchai, 2006. "Bond Markets as Conduits for Capital Flows: How Does Asia Compare?," NBER Working Papers 12408, National Bureau of Economic Research, Inc.
  3. Daude, Christian & Fratzscher, Marcel, 2008. "The pecking order of cross-border investment," Journal of International Economics, Elsevier, vol. 74(1), pages 94-119, January.
  4. Hahm, Joon-Ho & Shin, Kwanho, 2009. "Complementarity among international asset holdings," Journal of the Japanese and International Economies, Elsevier, vol. 23(1), pages 37-55, March.
  5. Thomas, Hugh & Wang, Zhiqiang, 2004. "The integration of bank syndicated loan and junk bond markets," Journal of Banking & Finance, Elsevier, vol. 28(2), pages 299-329, February.
  6. Hahm, Joon-Ho & Shin, Kwanho, 2006. "Complementarity among International Asset Holdings: Do Banks Have a Special Role?," MPRA Paper 705, University Library of Munich, Germany.
  7. Joern Kleinert & Bettina Brueggemann & Esteban Prieto, 2012. "The Ideal Loan and the Patterns of Cross-Border Bank Lending," Graz Economics Papers 2012-03, University of Graz, Department of Economics.
  8. Philip Lane & Gian Maria Milesi-Ferretti, 2005. "International Investment Patterns," The Institute for International Integration Studies Discussion Paper Series iiisdp024, IIIS.
  9. Yohei Okawa & Eric van Wincoop, 2010. "Gravity in International Finance," Working Papers 072010, Hong Kong Institute for Monetary Research.
  10. Pericoli, Filippo & Pierucci, Eleonora & Ventura, Luigi, 2011. "International investment positions and risk sharing: an empirical analysis on the coordinated portfolio investment survey," MPRA Paper 33071, University Library of Munich, Germany.
  11. Shin, Kwanho & Yang, Doo Yong, 2006. "Complementarity between Bilateral Trade and Financial Integration," MPRA Paper 694, University Library of Munich, Germany.
  12. Pipat Luengnaruemitchai & Barry J. Eichengreen, 2006. "Bond Markets As Conduits for Capital Flows," IMF Working Papers 06/238, International Monetary Fund.
  13. Kim, Soyoung & Lee, Jong-Wha & Shin, Kwanho, 2006. "Regional and Global Financial Integration in East Asia," MPRA Paper 695, University Library of Munich, Germany.
  14. Mishra, Anil V., 2007. "International investment patterns: Evidence using a new dataset," Research in International Business and Finance, Elsevier, vol. 21(2), pages 342-360, June.
  15. Lee, Jong-Wha, 2008. "Patterns and Determinants of Cross-border Financial Asset Holdings in East Asia," Working Papers on Regional Economic Integration 13, Asian Development Bank.

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