Distance and International Banking

Kiel Working Paper No. 1043

34 Pages Posted: 10 Jun 2001

Date Written: April 2001

Abstract

If the technological revolution which has taken place over the past decades has lowered information costs and if information costs increase in distance, distance should - ceteris paribus - become less important in determining international bank lending. We are using a dataset on assets and liabilities of commercial banks from five countries (France, Germany, Italy, UK, US) in up to 50 host countries for the years 1983 through 1998 to test this hypothesis. For the European banks, distance has remained of the same importance it used to have. For the US, a declining importance of distance was found. Several interpretations of these findings are discussed.

Keywords: Cross-border banking, information costs

JEL Classification: F21, G21

Suggested Citation

Buch, Claudia M., Distance and International Banking (April 2001). Kiel Working Paper No. 1043, Available at SSRN: https://ssrn.com/abstract=271650 or http://dx.doi.org/10.2139/ssrn.271650

Claudia M. Buch (Contact Author)

Deutsche Bundesbank ( email )

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

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