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Banking across borders

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  • Niepmann, Friederike

Abstract

Banking across borders has risen substantially over the past two decades. Yet there is significant heterogeneity in the international and global activities of banks across countries. This paper develops and tests a theoretical model that explains this variation from an international trade theory perspective. In the model, banking across borders arises from differences in factor endowments and differences in banking sector efficiencies between countries. The paper shows how these differences determine banks' foreign asset and liability holdings as well as foreign direct investment in the banking sector. It highlights the differential effects of capital account and banking sector liberalization on banks' foreign positions and international capital flows. The model is consistent with major stylized facts on cross-border banking. The data strongly support its cross-sectional predictions. --

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Bibliographic Info

Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Papers with number 19/2013.

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Date of creation: 2013
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Handle: RePEc:zbw:bubdps:192013

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Keywords: cross-border banking; international capital flows; trade in banking services;

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Citations

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Cited by:
  1. Claudia M. Buch & Katja Neugebauer & Christoph Schröder, 2013. "Changing Forces of Gravity: How the Crisis Affected International Banking," IAW Discussion Papers, Institut für Angewandte Wirtschaftsforschung (IAW) 100, Institut für Angewandte Wirtschaftsforschung (IAW).
  2. Lane, Philip R. & McQuade, Peter, 2013. "Domestic credit growth and international capital flows," Working Paper Series, European Central Bank 1566, European Central Bank.
  3. Friederike Niepmann, 2013. "Banking across borders with heterogeneous banks," Staff Reports, Federal Reserve Bank of New York 609, Federal Reserve Bank of New York.
  4. Friederike Niepmann & Tim Schmidt-Eisenlohr, 2013. "Banks in international trade finance: evidence from the U.S," Staff Reports, Federal Reserve Bank of New York 633, Federal Reserve Bank of New York.
  5. Linda S. Goldberg, 2013. "Banking Globalization, Transmission, and Monetary Policy Autonomy," NBER Working Papers 19497, National Bureau of Economic Research, Inc.
  6. Friederike Niepmann & Tim Schmidt-Eisenlohr, 2014. "International Trade, Risk and the Role of Banks," CESifo Working Paper Series 4761, CESifo Group Munich.
  7. Daniel Carvalho, 2014. "Financial Integration and the Great Leveraging," Working Papers, Banco de Portugal, Economics and Research Department w201407, Banco de Portugal, Economics and Research Department.
  8. Philip Lane, 2013. "International Capital Flows and Domestic Financial Conditions: Lessons for Emerging Asia," The Institute for International Integration Studies Discussion Paper Series, IIIS iiisdp438, IIIS.
  9. David VanHoose, 2013. "A Model of International Trade in Banking Services," Open Economies Review, Springer, Springer, vol. 24(4), pages 613-625, September.

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