Changing Forces of Gravity: How the Crisis Affected International Banking

45 Pages Posted: 28 Jan 2014

See all articles by Claudia M. Buch

Claudia M. Buch

Deutsche Bundesbank

Katja Neugebauer

Institute for Applied Economic Research (IAW); University of Tuebingen - Faculty of Economics and Business Administration

Christoph Schroeder

ZEW – Leibniz Centre for European Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: January 27, 2014

Abstract

The global financial crisis has brought to an end a rather unprecedented period of banks’ international expansion. We analyze the effects of the crisis on international banking. Using a detailed dataset on the international assets of all German banks with foreign affiliates for the years 2002-2011, we study bank internationalization before and during the crisis. Our data allow analyzing not only the international assets of the banks’ headquarters but also of their foreign affiliates. We show that banks have lowered their international assets, both along the extensive and the intensive margin. This withdrawal from foreign markets is the result of changing market conditions, of policy interventions, and of a weakly increasing sensitivity of banks to financial frictions.

Keywords: international banking, gravity model, financial frictions

JEL Classification: G01, F34, G21

Suggested Citation

Buch, Claudia M. and Neugebauer, Katja and Schroeder, Christoph, Changing Forces of Gravity: How the Crisis Affected International Banking (January 27, 2014). ZEW - Centre for European Economic Research Discussion Paper No. 14-006. Available at SSRN: https://ssrn.com/abstract=2385996 or http://dx.doi.org/10.2139/ssrn.2385996

Claudia M. Buch

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Katja Neugebauer

Institute for Applied Economic Research (IAW) ( email )

Ob dem Himmelreich 1
Tubingen, 72074
Germany

University of Tuebingen - Faculty of Economics and Business Administration ( email )

Mohlstrasse 36
D-72074 Tuebingen, 72074
Germany

Christoph Schroeder (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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