Banks in Space: Does Distance Really Affect Cross-Border Banking?
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 matter 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, and I estimate cross-section regressions for each year. I find strong evidence for a spatial dimension in cross-border banking. Furthermore, the direct effect of distance decreases significantly when applying spatial econometric techniques.
Year of publication: |
2011-09
|
---|---|
Authors: | Neugebauer, Katja |
Institutions: | European Regional Science Association |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Schockübertragung und Drittlandeffekte auf internationalen Bankenmärkten
Neugebauer, Katja, (2010)
-
Bank-specific shocks and the real economy
Buch, Claudia M., (2011)
-
Banks in Space: Does Distance Really Affect Cross-Border Banking?
Neugebauer, Katja, (2011)
- More ...