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The Determinants of International Financial Integration Revisited: The Role of Networks and Geographic Neutrality

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  • Pérez García Francisco

    ()
    (UNIVERSITY OF VALENCIA VALENCIAN ECONOMIC RESEARCH INSTITUTE (Ivie))

  • Tortosa-Ausina Emili

    ()
    (INSTITUTO VALENCIANO DE INVESTIGACIONES ECONÓMICAS (Ivie) UNIVERSITY JAUME I)

  • Arribas Fernández Iván

    ()
    (University of Valencia; Ivie)

Abstract

Over the last two decades, the degree of international financial integration has increased substantially, becoming an important area of research for many financial economists. This working paper explores the determinants of the asymmetries in the international integration of banking systems. We consider an approach based on both network analysis and the concept of geographic neutrality. Our analysis focuses on the banking systems of 18 advanced economies between 1999 and 2005. Results indicate that banking integration should be assessed from the perspective of both inflows and outflows, given that they show different patterns for different countries. Using standard techniques, our results reinforce previous findings by the literature-especially the remarkable role of both geographic distance and trade integration. Nonparametric techniques reveal that the effect of the covariates on banking integration is not constant over the conditional distribution, which (in practical terms) implies that the sign of the relationship varies across countries.

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Bibliographic Info

Paper provided by Fundacion BBVA / BBVA Foundation in its series Working Papers with number 201049.

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Length: 71
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:fbb:wpaper:201049

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Keywords: Banking integration; geographic neutrality; network analysis; nonparametric regression.;

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Cited by:
  1. Arribas, Iván & Pérez, Francisco & Tortosa-Ausina, Emili, 2011. "A network perspective on international banking integration," Journal of Policy Modeling, Elsevier, vol. 33(6), pages 831-851.

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