International Investment in Financial Services

21 Pages Posted: 29 Sep 2008 Last revised: 12 Jan 2009

Fariborz Moshirian

Institute of Global Finance, UNSW Business School

Date Written: September 29, 2008

Abstract

This paper analyzes and models the significant components of international trade in financial services, namely, foreign direct investment in banking for the US, the UK and Germany. It distinguishes between banks' activities abroad and FDI in banking by banks and non-banks. A model for FDI in banking is proposed which contains certain explanatory variables peculiar to FDI in banking as compared to FDI in manufacturing. The components of the model of FDI in banking is different from those models designed to explain banks activities abroad. The empirical results of this study of FDI in banking indicate that bilateral trade, banks' foreign assets, the cost of capital, relative economic growth, exchange rates and FDI in non-finance industries are the major determinants of foreign investment in banking.

Keywords: FDI in Banking, Financial Services, Data in FDI in Banking

JEL Classification: G15, G25

Suggested Citation

Moshirian, Fariborz, International Investment in Financial Services (September 29, 2008). Journal of Banking and Finance, Vol. 25, No. 2, 2001. Available at SSRN: https://ssrn.com/abstract=1275224

Fariborz Moshirian (Contact Author)

Institute of Global Finance, UNSW Business School ( email )

Sydney, NSW 2052
Australia
+61 2 93855859 (Phone)
+61 2 94877519 (Fax)

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