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Size, productivity, and international banking

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  • Buch, Claudia M.
  • Koch, Cathérine T.
  • Koetter, Michael

Abstract

Heterogeneity in size and productivity is central to models that explain which manufacturing firms export. This study presents descriptive evidence on similar heterogeneity among international banks as financial services providers. A novel and detailed bank-level data set reveals the volume and mode of international activities for all German banks. Only a few, large banks have a commercial presence abroad, consistent with the size pecking order documented for manufacturing firms. However, the relationship between internationalization and productivity also yields two inconsistencies with recent trade models. First, virtually all banks hold at least some foreign assets, irrespective of size or productivity. Second, some fairly unproductive banks maintain commercial presences abroad.

Suggested Citation

  • Buch, Claudia M. & Koch, Cathérine T. & Koetter, Michael, 2011. "Size, productivity, and international banking," Journal of International Economics, Elsevier, vol. 85(2), pages 329-334.
    • Handle: RePEc:eee:inecon:v:85:y:2011:i:2:p:329-334
    DOI: 10.1016/j.jinteco.2011.07.001
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    More about this item

    Keywords

    Trade in financial services; International banking; Foreign entry modes; Size; Productivity;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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