Margins of international banking is there a productivity pecking order in banking, too?

Modern trade theory emphasizes firm-level productivity differentials to explain the cross-border activities of non-financial firms. This study tests whether a productivity pecking order also determines international banking activities. Using a novel dataset that contains all German banks' inter...

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Bibliographische Detailangaben
1. Verfasser: Buch, Claudia M. (VerfasserIn)
Weitere Verfasser: Koch, Cathérine Tahmee (VerfasserIn), Kötter, Michael (VerfasserIn)
Format: UnknownFormat
Sprache:eng
Veröffentlicht: Munich Univ., Center for Economic Studies 2009
Schriftenreihe:CESifo working paper series Monetary policy and international finance 2891
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Zusammenfassung:Modern trade theory emphasizes firm-level productivity differentials to explain the cross-border activities of non-financial firms. This study tests whether a productivity pecking order also determines international banking activities. Using a novel dataset that contains all German banks' international activities, we estimate the ordered probability of a presence abroad (extensive margin) and the volume of international assets (intensive margin). Methodologically, we enrich the conventional Heckman selection model to account for the self-selection of banks into different modes of foreign activities using an ordered probit. Four main findings emerge. First, similar to results for non-financial firms, a productivity pecking order drives bank internationalization. Second, only a few non-financial firms engage in international trade, but many banks hold international assets, and only a few large banks engage in foreign direct investment. Third, in addition to productivity, risk factors matter for international banking. Fourth, gravity-type variables have an important impact on international banking activities.
Beschreibung:Literaturverz. S.24-26
Beschreibung:43 S.
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