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The Geography of European Cross-Border Banking: The Impact of Cultural and Political Factors

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Author Info
Heuchemer, Sylvia
Kleimeier, Stefanie
Sander, Harald (METEOR)

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Abstract

We investigate the determinants of European banking market integration with a focus on the potentially limiting role of cultural and political factors. Employing a unique data set of European cross-border loans and deposits, the study uses various gravity models that are augmented by societal proxies. While trade-theoretic reasoning can explain part of the surge in cross-border banking, we demonstrate that distance and borders still matter in the geography of European cross-border banking. Moreover, we can identify cultural differences and different legal family origin as important barriers to integration.

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Paper provided by Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization in its series Research Memoranda with number 008.

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Date of creation: 2008
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Handle: RePEc:dgr:umamet:2008008

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Keywords: Economics (Jel: A);

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