Few Large with Many Small: Banks Size Distribution and Cross-Border Financial Linkages

We estimate the effect of the distribution of banks by asset size on a country’s propensity to engage in cross-border banking. Countries where the distribution of banks by asset size is more skewed to the right (with few large and many small banks) lend more abroad and are recipients of more funds f...

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Bibliographic Details
Published inJournal of financial services research Vol. 56; no. 3; pp. 229 - 258
Main Authors Navaretti, Giorgio Barba, Calzolari, Giacomo, Pozzolo, Alberto Franco, de Daverio, Maria Teresa Trentinaglia
Format Journal Article
LanguageEnglish
Published New York Springer US 01.12.2019
Springer Nature B.V
Subjects
Assets
Banking
Borders
Economics and Finance
Finance
Financial Services
International banking
Macroeconomics/Monetary Economics//Financial Economics
Markets
F32
F65
Bank size
G21
F36
BIS International banking statistics
Gravity equations
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Summary:We estimate the effect of the distribution of banks by asset size on a country’s propensity to engage in cross-border banking. Countries where the distribution of banks by asset size is more skewed to the right (with few large and many small banks) lend more abroad and are recipients of more funds from foreign banks. This is consistent with the fact that large banks, with easier access to the international financial markets, act as a hub for smaller banks and at the same time stand out as safer too-big-to fail counterparts for foreign partners.
ISSN:0920-8550
1573-0735
DOI:10.1007/s10693-019-00325-5