Is Foreign-Bank Efficiency in Financial Centers Driven by Home-Country Characteristics?

Journal of Productivity Analysis, pp. 1-19, doi:10.1007/s11123-012-0294-y  

Posted: 13 May 2011 Last revised: 23 Jul 2020

See all articles by Claudia Curi

Claudia Curi

Free University of Bolzano-Bozen, Faculty of Economics and Management

Paolo Guarda

Banque Centrale du Luxembourg

Ana Lozano-Vivas

Independent

Valentin Zelenyuk

School of Economics, Centre for Efficiency and Productivity Analysis, The University of Queensland, Australia

Date Written: June 22, 2012

Abstract

This paper investigates the effects of home country banking regulations on the performance of foreign banks in Luxembourg’s financial center. We control for the main regulatory indicators, such as capital requirements, private monitoring, official disciplinary power and restrictions on bank activities, accounting for the regulatory regime applied to foreign banks. We also control for the level of GDP in the home country and its position in the business cycle. The two-stage bootstrap method proposed by Simar and Wilson (2007) is applied to bank panel data covering 1999-2009. The analysis carries policy implications for bank regulators in both home and host countries and provides insight into the choice between establishing a branch or a subsidiary, when developing cross-border activities through financial centers.

Keywords: Foreign bank efficiency, Home-host country characteristics, Bank regulation, Data

JEL Classification: G15, G21, G28, C14

Suggested Citation

Curi, Claudia and Guarda, Paolo and Lozano-Vivas, Ana and Zelenyuk, Valentin, Is Foreign-Bank Efficiency in Financial Centers Driven by Home-Country Characteristics? (June 22, 2012). Journal of Productivity Analysis, pp. 1-19, doi:10.1007/s11123-012-0294-y   , Available at SSRN: https://ssrn.com/abstract=1833327 or http://dx.doi.org/10.2139/ssrn.1833327

Claudia Curi (Contact Author)

Free University of Bolzano-Bozen, Faculty of Economics and Management ( email )

Universitätsplatz 1-Piazza Università 1
Bozen-Bolzano, Bolzano 39100
Italy
+39 0471 13498 (Phone)

Paolo Guarda

Banque Centrale du Luxembourg ( email )

2, boulevard Royal
Luxembourg, L-2983
Luxembourg

Ana Lozano-Vivas

Independent

Valentin Zelenyuk

School of Economics, Centre for Efficiency and Productivity Analysis, The University of Queensland, Australia ( email )

530, Colin Clark Building (39)
Brisbane, 4067
Australia

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