@techreport{Buch2009Margins,
abstract = {Modern trade theory emphasizes firm-level productivity differentials to explain the cross-border activities of non-financial firms. This study tests whether a productivity pecking order also determines international banking activities. Using a novel dataset that contains all German banks' international activities, we estimate the ordered probability of a presence abroad (extensive margin) and the volume of international assets (intensive margin). Methodologically, we enrich the conventional Heckman selection model to account for the self-selection of banks into different modes of foreign activities using an ordered probit. Four main findings emerge. First, similar to results for non-financial firms, a productivity pecking order drives bank internationalization. Second, only a few non-financial firms engage in international trade, but many banks hold  nternational assets, and only a few large banks engage in foreign direct investment. Third, in addition to productivity, risk factors matter for international banking. Fourth, gravity-type variables have an important impact on international banking activities.},
address = {Frankfurt am Main},
author = {Claudia M. Buch and Cath\'{e}rine Tahmee Koch and Michael Koetter},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
isbn = {978-3-86558-569-1},
keywords = {F3; G21; 330; International banking; extensive and intensive margin; productivity pecking order; ordered probit; selection models; Internationale Bank; Bankgesch\"{a}ft; Internationale Markteintrittsstrategie; Produktivit\"{a}t; Probit-Modell; Sch\"{a}tzung; Deutschland},
language = {eng},
number = {2009,12},
publisher = {Deutsche Bundesbank},
title = {Margins of international banking: is there a productivity pecking order in banking, too?},
type = {Discussion Paper Series 2: Banking and financial studies},
url = {http://hdl.handle.net/10419/28621},
year = {2009}
}

