Diversification and determinants of international credit portfolios: Evidence from German banks
This paper examines the international credit portfolios of German banks. We construct a bank-country panel from a unique dataset for a representative set of countries and ask why banks leave diversification opportunities unexploited in some countries. Controlling for bank heterogeneity, we analyse the deviations of actual portfolios from a mean-variance based benchmark and their country-level determinants. Our results show that banking regulations are important determinants of the credit allocation of German banks. We present robust evidence that countries with stricter capital adequacy and entry requirements tend to be overweighted, primarily due to excess profits resulting from a lower level of banking market competition. German banks also overweight countries with larger and more developed banking markets. Moreover, we find support that German banks follow their domestic customers abroad to maintain existing lending relationships. Geographical factors, in contrast, do not seem to matter. Our findings suggest that changes in and convergence of banking regulations as well as financial deepening of banking sectors around the world may, in the long term, result in banks holding more diversified international credit portfolios.
|Date of creation:||2012|
|Date of revision:|
|Contact details of provider:|| Postal: Postfach 10 06 02, 60006 Frankfurt|
Phone: 0 69 / 95 66 - 34 55
Fax: 0 69 / 95 66 30 77
Web page: http://www.bundesbank.de/
More information through EDIRC
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.:
- Sven Blank & Claudia M Buch, 2007. "The Euro and Cross-Border Banking: Evidence from Bilateral Data," Comparative Economic Studies, Palgrave Macmillan, vol. 49(3), pages 389-410, September.
- Emilia Magdalena Jurzyk & Olena Havrylchyk, 2010.
"Inherited or Earned? Performance of Foreign Banks in Central and Eastern Europe,"
IMF Working Papers
10/4, International Monetary Fund.
- Havrylchyk, Olena & Jurzyk, Emilia, 2011. "Inherited or earned? Performance of foreign banks in Central and Eastern Europe," Journal of Banking & Finance, Elsevier, vol. 35(5), pages 1291-1302, May.
- Olena Havrylchyk & Emilia Jurzyk, 2008. "Inherited or Earned? Performance of Foreign Banks in Central and Eastern Europe," Working Papers 2008-16, CEPII research center.
- Claudia M. Buch & John C. Driscoll & Charlotte Ostergaard, 2004.
"Cross-Border Diversification in Bank Asset Portfolios,"
2004/11, Norges Bank.
- Claudia M. Buch & John C. Driscoll & Charlotte Ostergaard, 2010. "Cross-Border Diversification in Bank Asset Portfolios," International Finance, Wiley Blackwell, vol. 13(1), pages 79-108, 03.
- Claudia M. Buch & John C. Driscoll & Charlotte Ostergaard, 2004. "Cross-border diversification in bank asset portfolios," Finance and Economics Discussion Series 2004-26, Board of Governors of the Federal Reserve System (U.S.).
- Buch, Claudia M. & Driscoll, John C. & Ostergaard, Charlotte, 2005. "Cross-border diversification in bank asset portfolios," Working Paper Series 0429, European Central Bank.
- Jappelli, Tullio & Pagano, Marco, 2008.
"Financial Market Integration Under EMU,"
CEPR Discussion Papers
7091, C.E.P.R. Discussion Papers.
- Tullio Jappelli & Marco Pagano, 2008. "Financial Market Integration Under EMU," CSEF Working Papers 197, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Jappelli, Tullio & Pagano, Marco, 2008. "Financial market integration under EMU," CFS Working Paper Series 2008/33, Center for Financial Studies (CFS).
- Tullio Jappelli & Marco Pagano, 2008. "Financial Market Integration under EMU," European Economy - Economic Papers 2008 - 2015 312, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
- Kose, M. Ayhan & Otrok, Christopher & Prasad, Eswar, 2008.
"Global Business Cycles: Convergence or Decoupling?,"
IZA Discussion Papers
3442, Institute for the Study of Labor (IZA).
- M. Ayhan Kose & Christopher Otrok & Eswar Prasad, 2012. "Global Business Cycles: Convergence Or Decoupling?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(2), pages 511-538, 05.
- Ayhan Kose & Eswar Prasad & Christopher Otrok, 2008. "Global Business Cycles; Convergence or Decoupling?," IMF Working Papers 08/143, International Monetary Fund.
- Kose, M. Ayhan & Otrok, Christopher M. & Prasad, Eswar S., 2008. "Global business cycles: convergence or decoupling?," Discussion Paper Series 1: Economic Studies 2008,17, Deutsche Bundesbank, Research Centre.
- M. Ayhan Kose & Christopher Otrok & Eswar S. Prasad, 2008. "Global Business Cycles: Convergence or Decoupling?," NBER Working Papers 14292, National Bureau of Economic Research, Inc.
- Düwel, Cornelia & Frey, Rainer & Lipponer, Alexander, 2011. "Cross-border bank lending, risk aversion and the financial crisis," Discussion Paper Series 1: Economic Studies 2011,29, Deutsche Bundesbank, Research Centre.
- Cerutti, Eugenio & Dell'Ariccia, Giovanni & Martinez Peria, Maria Soledad, 2005.
"How banks go abroad : branches or subsidiaries ?,"
Policy Research Working Paper Series
3753, The World Bank.
- 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.
- James Tobin, 1956.
"Liquidity Preference as Behavior Towards Risk,"
Cowles Foundation Discussion Papers
14, Cowles Foundation for Research in Economics, Yale University.
- Arnoud W.A. Boot & Matej Marinc, 2006.
"Competition and Entry in Banking: Implications for Stability and Capital Regulation,"
Tinbergen Institute Discussion Papers
06-015/2, Tinbergen Institute.
- Boot, Arnoud W A & Marinc, Matej, 2006. "Competition and Entry in Banking: Implications for Stability and Capital Regulation," CEPR Discussion Papers 5518, C.E.P.R. Discussion Papers.
- Daniel E. Nolle & Rama Seth, 1996. "Do banks follow their customers abroad?," Research Paper 9620, Federal Reserve Bank of New York.
- de Haas, Ralph & van Lelyveld, Iman, 2006.
"Foreign banks and credit stability in Central and Eastern Europe. A panel data analysis,"
Journal of Banking & Finance,
Elsevier, vol. 30(7), pages 1927-1952, July.
- Ralph de Haas & Iman van Lelyveld, 2003. "Foreign Banks and Credit Stability in Central and Eastern Europe: A Panel Data Analysis," DNB Staff Reports (discontinued) 109, Netherlands Central Bank.
- Robert McCauley & Patrick McGuire & Goetz von Peter, 2010. "The architecture of global banking: from international to multinational?," BIS Quarterly Review, Bank for International Settlements, March.
- Haselmann, Rainer, 2006. "Strategies of foreign banks in transition economies," Emerging Markets Review, Elsevier, vol. 7(4), pages 283-299, December.
When requesting a correction, please mention this item's handle: RePEc:zbw:bubdps:282012. 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: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.