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Banking across borders

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  • Friederike Niepmann

Abstract

This paper develops and tests a theoretical model that allows for the endogenous decision of banks to engage in international and global banking. International banking, where banks raise capital in the home market and lend it abroad, is driven by differences in factor endowments across countries. In contrast, global banking, where banks intermediate capital locally in the foreign market, arises from differences in country-level bank efficiency. Together, these two driving forces determine the foreign assets and liabilities of a banking sector. The model provides a rationale for the observed rise in global banking relative to international banking. Its key predictions regarding the cross-country pattern of foreign bank asset and liability holdings are strongly supported by the data.

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Bibliographic Info

Paper provided by Federal Reserve Bank of New York in its series Staff Reports with number 576.

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Date of creation: 2012
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Handle: RePEc:fip:fednsr:576

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Keywords: Banks and banking; International ; Globalization ; Banks and banking; Foreign ; Loans; Foreign ; Capital movements;

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References

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Citations

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Cited by:
  1. Friederike Niepmann & Tim Schmidt-Eisenlohr, 2013. "Banks in international trade finance: evidence from the U.S," Staff Reports 633, Federal Reserve Bank of New York.
  2. Claudia M. Buch & Katja Neugebauer & Christoph Schröder, 2013. "Changing Forces of Gravity: How the Crisis Affected International Banking," IAW Discussion Papers 100, Institut für Angewandte Wirtschaftsforschung (IAW).
  3. Philip Lane & Peter McQuade, 2013. "Domestic Credit Growth and International Capital Flows," The Institute for International Integration Studies Discussion Paper Series iiisdp428, IIIS.
  4. Daniel Carvalho, 2014. "Financial Integration and the Great Leveraging," Working Papers w201407, Banco de Portugal, Economics and Research Department.
  5. Linda S. Goldberg, 2013. "Banking Globalization, Transmission, and Monetary Policy Autonomy," NBER Working Papers 19497, National Bureau of Economic Research, Inc.
  6. Philip Lane, 2013. "International Capital Flows and Domestic Financial Conditions: Lessons for Emerging Asia," The Institute for International Integration Studies Discussion Paper Series iiisdp438, IIIS.
  7. Friederike Niepmann & Tim Schmidt-Eisenlohr, 2014. "International Trade, Risk and the Role of Banks," CESifo Working Paper Series 4761, CESifo Group Munich.
  8. Friederike Niepmann, 2013. "Banking across borders with heterogeneous banks," Staff Reports 609, Federal Reserve Bank of New York.
  9. David VanHoose, 2013. "A Model of International Trade in Banking Services," Open Economies Review, Springer, vol. 24(4), pages 613-625, September.
  10. Linda S. Goldberg, 2013. "Banking globalization, transmission, and monetary policy autonomy," Staff Reports 640, Federal Reserve Bank of New York.

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