Information or Regulation: What is Driving the International Activities of Commercial Banks?

Kiel Working Paper No. 1011

51 Pages Posted: 8 Apr 2001

Date Written: November 2000

Abstract

Information costs and regulatory barriers are the main distinguishing features of international as compared to national financial markets. This paper presents a simple model of the impact of these factors on banks' cross border activities and provides empirical evidence. Our dataset allows us to capture both the time series and the cross-section dimension of information costs and changes in regulations, in particular for intra-EU asset holdings. While EU membership per se seems to have had a negative impact on cross-border banking activities, the adoption of the Single Market clearly had a positive impact. Regulations and information costs are important for all reporting countries but their relative importance differs between countries.

Keywords: cross-border banking, information costs, panel cointegration

JEL Classification: F21, G21

Suggested Citation

Buch, Claudia M., Information or Regulation: What is Driving the International Activities of Commercial Banks? (November 2000). Kiel Working Paper No. 1011, Available at SSRN: https://ssrn.com/abstract=249866 or http://dx.doi.org/10.2139/ssrn.249866

Claudia M. Buch (Contact Author)

Deutsche Bundesbank ( email )

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

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