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

Author

Listed:
  • Giorgio Barba Navaretti

    (University of Milan, Centro Studi Luca D’Agliano)

  • Giacomo Calzolari

    (European Univeristy Institute, Centro Studi Luca d’Agliano, CEPR)

  • Alberto Franco Pozzolo

    (Roma Tre University, Centro Studi Luca dAgliano)

  • Maria Teresa Trentinaglia Daverio

    (University of Milan, Centro Studi Luca D’Agliano)

Abstract

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.

Suggested Citation

  • Giorgio Barba Navaretti & Giacomo Calzolari & Alberto Franco Pozzolo & Maria Teresa Trentinaglia Daverio, 2019. "Few Large with Many Small: Banks Size Distribution and Cross-Border Financial Linkages," Journal of Financial Services Research, Springer;Western Finance Association, vol. 56(3), pages 229-258, December.
    • Handle: RePEc:kap:jfsres:v:56:y:2019:i:3:d:10.1007_s10693-019-00325-5
    DOI: 10.1007/s10693-019-00325-5
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    1. Cerqueti, Roy & Lupi, Claudio & Pietrovito, Filomena & Pozzolo, Alberto Franco, 2022. "Rank–size distributions for banks: A cross-country analysis," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 585(C).
    2. Dionisis Philippas & Catalin Dragomirescu-Gaina & Alexandros Leontitsis & Stephanos Papadamou, 2023. "Built-in challenges within the supervisory architecture of the Eurozone," Journal of Banking Regulation, Palgrave Macmillan, vol. 24(1), pages 15-39, March.

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    More about this item

    Keywords

    BIS International banking statistics; Bank size; Gravity equations;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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