The Impact of Multinationals on the Size of the Banking System

Kyklos, Vol. 66, 2013, pp. 378-397

21 Pages Posted: 10 Feb 2013 Last revised: 12 Jul 2013

See all articles by Dirk Schoenmaker

Dirk Schoenmaker

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM); Centre for Economic Policy Research (CEPR)

Dewi Werkhoven

Duisenberg School of Finance

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Date Written: February 10, 2013

Abstract

After the global financial crisis, the size of the banking sector has become a hotly debated topic. To measure the size of the banking system a country’s banking assets divided by the country’s gross domestic product (GDP) is commonly applied as a general yardstick. This paper shows that this yardstick does not take into account differences in financial needs. In particular, countries differ with regard to the number and size of multinational enterprises. In a cross-country empirical study, we find a statistically significant relationship between the presence of large banks and the presence of multinationals, after controlling for the size of the country. That is why we develop an additional specific yardstick for firm specific financial needs.

Keywords: banks, too-big-to-save, multinationals

JEL Classification: G21, G28, D21

Suggested Citation

Schoenmaker, Dirk and Werkhoven, Dewi, The Impact of Multinationals on the Size of the Banking System (February 10, 2013). Kyklos, Vol. 66, 2013, pp. 378-397, Available at SSRN: https://ssrn.com/abstract=2214583

Dirk Schoenmaker (Contact Author)

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam
Netherlands

HOME PAGE: http://www.rsm.nl/people/dirk-schoenmaker/

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Dewi Werkhoven

Duisenberg School of Finance ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

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