Neugebauer, Katja (2011) Banks in space: does distance really affect cross-border banking. IAW-Diskussionspapiere (70). IAW, Tübingen, Germany.
Full text not available from this repository.Abstract
During the last years, gravity equations have leapt from the trade literature over into the literature on financial markets. Martin and Rey (2004) were the first to provide a theoretical model for cross-border asset trade, yielding a structural gravity equation that could be tested empirically. In this paper, I use a gravity model to evaluate factors that affect cross-border banking. Furthermore, I extend the baseline model to allow for third-country effects, which have been shown to atter for international trade, using spatial econometric techniques. I try to answer the following question: First, is there a spatial dimension in cross-border banking? Second, if so, has it changed over time, and third, what happens if this spatial dimension is ignored? I use bilateral data on cross-border banking assets for 15 countries over the time period 1995-2005, and I estimate cross-section regressions for each year. I find strong evidence for a spatial dimension in crossborder banking. Furthermore, the direct effect of distance decreases signficantly when applying spatial econometric techniques.
| Item Type: | Monograph (Working Paper) |
|---|---|
| Official URL: | http://www.iaw.edu |
| Additional Information: | © 2011 IAW |
| Divisions: | Systemic Risk Centre |
| Subjects: | H Social Sciences > HG Finance H Social Sciences > HV Social pathology. Social and public welfare. Criminology |
| JEL classification: | G - Financial Economics > G1 - General Financial Markets > G10 - General G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages |
| Date Deposited: | 10 Jun 2014 16:34 |
| Last Modified: | 13 Sep 2024 20:20 |
| URI: | http://eprints.lse.ac.uk/id/eprint/57025 |
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