Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88773
Authors: 
Bremus, Franziksa
Year of Publication: 
2013
Series/Report no.: 
DIW Discussion Papers 1344
Abstract: 
Patterns in cross-border banking have changed since the global financial crisis. This may affect domestic bank market structures and macroeconomic stability in the longer term. In this study, I theoretically and empirically analyze how different modes of cross-border banking impact bank concentration. I use a two- country general equilibrium model with heterogeneous banks developed by De Blas and Russ (2010) to grasp the effect of cross-border lending and foreign direct investment in the banking sector on bank market structures. The model suggests that both cross-border lending and bank FDI mitigate concentration. Empirical evidence from a linked micro-macro panel dataset of 18 OECD countries supports the theoretical predictions: higher volumes of bank FDI and of cross-border lending coincide with lower Herfindahl-indexes in bank credit markets.
Subjects: 
cross-border lending
bank foreign direct investment
bank market concentration
net interest margins
JEL: 
E44
F41
G21
Document Type: 
Working Paper

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