The Geography of European Cross-Border Banking: The Impact of Cultural and Political Factors

Maastricht University METEOR Research Memorandum No. RM/08/008

50 Pages Posted: 28 Apr 2008 Last revised: 2 May 2008

See all articles by Sylvia Heuchemer

Sylvia Heuchemer

Cologne University of Applied Sciences

Stefanie Kleimeier

Maastricht University - Department of Finance; Open Universiteit; Univ. of Stellenbosch Business School

Harald Sander

University of Applied Sciences Cologne

Date Written: April 24, 2008

Abstract

We investigate the determinants of European banking market integration with a focus on the potentially limiting role of cultural and political factors. Employing a unique data set of European cross-border loans and deposits, the study uses various gravity models that are augmented by societal proxies. While trade-theoretic reasoning can explain part of the surge in cross-border banking, we demonstrate that distance and borders still matter in the geography of European cross-border banking. Moreover, we can identify cultural differences and different legal family origin as important barriers to integration.

Keywords: cross-border loans, cross-border deposits, banking market integration, gravity model, culture, European single market

JEL Classification: C21, F34, F36, K20, Z10

Suggested Citation

Heuchemer, Sylvia and Kleimeier, Stefanie and Sander, Harald, The Geography of European Cross-Border Banking: The Impact of Cultural and Political Factors (April 24, 2008). Maastricht University METEOR Research Memorandum No. RM/08/008, Available at SSRN: https://ssrn.com/abstract=1126263 or http://dx.doi.org/10.2139/ssrn.1126263

Sylvia Heuchemer (Contact Author)

Cologne University of Applied Sciences ( email )

Claudiusstrasse 1
Cologne, 50678
Germany
+ 49 221 8275 3431 (Phone)
+ 49 221 8275 3135 (Fax)

Stefanie Kleimeier

Maastricht University - Department of Finance ( email )

Maastricht, 6200 MD
Netherlands

Open Universiteit

Valkenburgerweg 177
Heerlen, 6419 AT
Netherlands

Univ. of Stellenbosch Business School

Carl Cronjé Drive
CAPE TOWN, Cape Town 7535
South Africa

Harald Sander

University of Applied Sciences Cologne ( email )

Claudiusstrrasse 1
50678 Cologne
Germany
+49 221 82753419 (Phone)
+49 221 82753131 (Fax)

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