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Size, productivity, and international banking

  • Buch, Claudia M.
  • Koch, Cathérine T.
  • Koetter, Michael

Heterogeneity in size and productivity is central to models that explain which manufacturing firms export. This study presents descriptive evidence on similar heterogeneity among international banks as financial services providers. A novel and detailed bank-level data set reveals the volume and mode of international activities for all German banks. Only a few, large banks have a commercial presence abroad, consistent with the size pecking order documented for manufacturing firms. However, the relationship between internationalization and productivity also yields two inconsistencies with recent trade models. First, virtually all banks hold at least some foreign assets, irrespective of size or productivity. Second, some fairly unproductive banks maintain commercial presences abroad.

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File URL: http://www.sciencedirect.com/science/article/pii/S002219961100078X
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Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 85 (2011)
Issue (Month): 2 ()
Pages: 329-334

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Handle: RePEc:eee:inecon:v:85:y:2011:i:2:p:329-334
DOI: 10.1016/j.jinteco.2011.07.001
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505552

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  2. Koetter, Michael & Wedow, Michael, 2006. "Finance and growth in a bank-based economy: is it quantity or quality that matters?," Discussion Paper Series 2: Banking and Financial Studies 2006,02, Deutsche Bundesbank, Research Centre.
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  16. Cerutti, Eugenio & Dell'Ariccia, Giovanni & Martinez Peria, Maria Soledad, 2007. "How banks go abroad: Branches or subsidiaries?," Journal of Banking & Finance, Elsevier, vol. 31(6), pages 1669-1692, June.
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