Bank internationalization and trade: What comes first?
We study the dynamic nexus that changes in foreign bank penetration have with changes in trade and FDI between some selected OECD countries and Central and Eastern Europe countries (CEECs). Following the literature, we contemplate the possibility that such a nexus might differ depending on whether foreign bank entry materializes through the opening of branches or by acquiring local subsidiaries. The question that we try to answer is whether bank internationalization led or followed the increase in trade and manufacturing FDI. Using data on the changes in the bilateral linkages between OECD origin countries and CEECs target countries between 1995 and 2002, we find only one strong link, going from the share of bilateral trade over total trade from the country of origin, which we define a "push factor", to the change in the presence of foreign branches. The link from trade to bank acquisition of foreign subsidiaries is instead much weaker. In addition, we find some evidence that the share of bilateral trade over total trade with the target country, which we define a "pull factor", affects bank internationalization through the acquisition of subsidiaries, but not through the opening of branches.
|Date of creation:||Jan 2009|
|Date of revision:|
|Contact details of provider:|| Postal: Piazzale Martelli, 8 6012 Ancona|
Phone: +39 071 220 7083
Fax: +39 071 220 7102
Web page: http://sites.google.com/site/mofirunivpm/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Focarelli, Dario & Pozzolo, Alberto Franco, 2003.
"Where Do Banks Expand Abroad? An Empirical Analysis,"
Economics & Statistics Discussion Papers
esdp03009, University of Molise, Dept. EGSeI.
- Dario Focarelli & Alberto Franco Pozzolo, 2005. "Where Do Banks Expand Abroad? An Empirical Analysis," The Journal of Business, University of Chicago Press, vol. 78(6), pages 2435-2464, November.
- Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2003.
"Export versus FDI,"
Harvard Institute of Economic Research Working Papers
1998, Harvard - Institute of Economic Research.
- Salvatore Baldone & Fabio Sdogati & Lucia Tajoli, 1999. "Patterns and Determinants of International Fragmentation of Production. Evidence from Outward Processing Trade between the EU and the Countries of Central-Eastern Europe," Development Working Papers 134, Centro Studi Luca d'Agliano, University of Milano.
- Yamori, Nobuyoshi, 1998. "A note on the location choice of multinational banks: The case of Japanese financial institutions," Journal of Banking & Finance, Elsevier, vol. 22(1), pages 109-120, January.
- Marc Ruhr & Michael Ryan, 2005. "“Following” or “attracting” the customer? Japanese Banking FDI in Europe," Atlantic Economic Journal, International Atlantic Economic Society, vol. 33(4), pages 405-422, December.
- Ball, Clifford A. & Tschoegl, Adrian E., 1982. "The Decision to Establish a Foreign Bank Branch or Subsidiary: An Application of Binary Classification Procedures," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 17(03), pages 411-424, September.
- Alejandro Reynoso, 2002. "Can Subsidiaries of Foreign Banks Contribute to the Stability of the Forex Market in Emerging Economies? A Look at Some Evidence from the Mexican..," NBER Working Papers 8864, National Bureau of Economic Research, Inc.
- Berger, Allen N. & Buch, Claudia M. & DeLong, Gayle & DeYoung, Robert, 2004. "Exporting financial institutions management via foreign direct investment mergers and acquisitions," Journal of International Money and Finance, Elsevier, vol. 23(3), pages 333-366, April.
- Daniel E. Nolle & Rama Seth, 1996. "Do banks follow their customers abroad?," Research Paper 9620, Federal Reserve Bank of New York.
- Claudia M. Buch & Gayle L. DeLong, 2001.
"Cross-Border Bank Mergers: What Lures the Rare Animal?,"
Kiel Working Papers
1070, Kiel Institute for the World Economy.
- Buch, Claudia M. & DeLong, Gayle, 2004. "Cross-border bank mergers: What lures the rare animal?," Journal of Banking & Finance, Elsevier, vol. 28(9), pages 2077-2102, September.
- Beck, Thorsten, 2001.
"Financial development and international trade : is there a link?,"
Policy Research Working Paper Series
2608, The World Bank.
- Beck, Thorsten, 2002. "Financial development and international trade: Is there a link?," Journal of International Economics, Elsevier, vol. 57(1), pages 107-131, June.
- Luca Papi & Debora Revoltella, 1999.
"Foreign Direct Investment in the Banking Sector: A Transitional Economy Perspective,"
Development Working Papers
133, Centro Studi Luca d'Agliano, University of Milano.
- Luca PAPI & Debora REVOLTELLA, 1999. "Foreign Direct Investment in the Banking Sector: a Transitional Economy Perspective," Working Papers 113, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
- Magri, Silvia & Mori, Alessandra & Rossi, Paola, 2005. "The entry and the activity level of foreign banks in Italy: An analysis of the determinants," Journal of Banking & Finance, Elsevier, vol. 29(5), pages 1295-1310, May.
- Williamson, Oliver E, 1979. "Transaction-Cost Economics: The Governance of Contractural Relations," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 233-61, October.
- ter Wengel, Jan, 1995. "International trade in banking services," Journal of International Money and Finance, Elsevier, vol. 14(1), pages 47-64, February.
When requesting a correction, please mention this item's handle: RePEc:anc:wmofir:11. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maurizio Mariotti)
If references are entirely missing, you can add them using this form.