XXV Edition

1-2 December 2016"

Bank Size and Financial Cross-Border Linkages

Barba Navaretti Giorgio, University of Milan
Calzolari Giacomo, University of Bologna
Pozzolo Alberto Franco, Molise University
Trentinaglia De Daverio Maria Teresa, University of Milan

We estimate the effect of the distribution of banks by asset size on a country’s propensity to engage in cross-border banking, using a standard two-step gravity regression framework. We find that measures of the asymmetry of the distribution of banks’ size have relevant power in explaining cross-border bank holdings, in addition to the standard variables normally considered in the gravity literature, such as country size and distance. Countries where the distribution of banks by asset size is more skewed to the right, meaning that there is a small number of very large banks, are recipients of a larger amount of funds from foreign banks. On the contrary, we do not find robust evidence that the distribution of banks by asset size impacts on the value of financial stakes held by banks abroad.

Area: Banking

Keywords: BIS Consolidated Bank Statistics, international banks, large banks

Paper file

University Network