Changing Forces of Gravity: How the Crisis Affected International Banking

47 Pages Posted: 21 Jun 2016

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 Schröder

ZEW – Leibniz Centre for European Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: 2013

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 Schröder, Christoph, Changing Forces of Gravity: How the Crisis Affected International Banking (2013). Bundesbank Discussion Paper No. 48/2013. Available at SSRN: https://ssrn.com/abstract=2796943

Claudia M. Buch (Contact Author)

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 Schröder

ZEW – Leibniz Centre for European Economic Research

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

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