Determinants and dynamics of the geography of global banking: The role of economic, cultural and political factors
Cross-border banking has increased dramatically, yet the determinants and dynamics of bilateral cross-border activities are not fully understood. Recent research shows that geographical distance matters even for “weightless” banking products and is thus producing an economic geography. However, distance is only an imperfect proxy for all informational, transactional, political, regulatory and cultural frictions which act as barriers to integration.
This project aims at an in-depth analysis of the determinants and dynamics of cross-border banking. The project will utilize two exclusive and confidential data sets and thus provide new insights in three important ways. Firstly, by focussing on global bilateral cross-border banking, banking geography can be investigated with a specific focus on (de)regulation and integration policies including the role of currency unions. Secondly, complementary to this macro-analysis a micro-analysis will be conducted using Dutch disaggregated bank-level data to highlight the role of different banking market characteristics. Thirdly, the insights obtained from these two sub-studies will be utilized for an in-depth analysis of cross-border banking with respect to the current financial crisis.
Overall, the project will provide a deeper understanding of the driving forces of globalization in banking and will thus be of significant guidance to policy makers concerned with financial market integration, currency unions and financial market stability.
In this project, I closely cooperate with Harald Sander and Sylvia Heuchemer from Cologne University of Applied Sciences and Ron Jongen from the Dutch Central Bank. This project has been made possible by a research grant from the NWO-DFG Cooperation Program.
Related Publications & Working Papers
- Sander, H. and S. Kleimeier, 2014, Introduction: Global Banking, Financial Stability, and Post-Crisis Policy Challenges Symposium, Comparative Economic Studies 56(2), 253-256.
- Sander, H., S. Kleimeier, and S. Heuchemer, 2013, E(M)U Effects in Global Cross-Border Banking, Economics Letters 118(1), 91-93.
- Kleimeier, S. and H. Sander, 2013, Les Activités Bancaires Transfromtalières de Détail: Un Aspect Méconnu de la Mondialisation Financière en Temps de Crise, Revue d’Economie Financiere 112 (December), 211-239.
- Kleimeier, S., H. Sander and S. Heuchemer, 2013, Financial Crises and Cross-Border Banking: New Evidence, Journal of International Money and Finance 32, 884-915.
- Sander, H. and S. Kleimeier, 2013, Cross-Border Retail Banking: Exploring the Unknown Financial Globalization in Times of Financial Crises, Credit and Capital Markets (formerly: Kredit und Kapital) 46 (2), 247–274.
- Heuchemer, S., S. Kleimeier and H. Sander, 2009, The Determinants of Cross-Border Lending in the Euro Zone, Comparative Economic Studies 51(4), 467-499.
- Sander, S., S. Kleimeier and S. Heuchemer, The Resurgence of Cultural Borders in International Finance during the Financial Crisis: Evidence from Eurozone Cross-Border Depositing.
Symposium & Special Issue of Comparative Economic Studies
Within the framework of this project and in cooperation with the European Center for Corporate Engagement (ECCE) and the Institute for Global Business & Society (GLOBUS), a symposium took place on February 1, 2013 in Maastricht regarding "Global Banking, Financial Stability, and Post-Crisis Policy Challenges".
A rapid globalization process of banking is the major characteristic of the economic environment in the last decade. While globalization was initially praised for improving the global allocation of capital, the financial crisis of 2007/08 as well as the subsequent Eurozone crisis have clearly revealed the threats to financial stability associated with banking globalization. It is now increasingly becoming obvious that gross, rather than net cross-border banking flows and the corresponding and often simultaneous build-up of both foreign assets and foreign liabilities have played a major role in the crises events.
Given the importance of cross-border banking, it is astonishing that the determinants and dynamics of the international banking geography are not yet fully understood. Moreover, as much as the impact of global banking on financial stability has been under-researched before the crisis, we are just now starting to understand the impact of financial crises on banking globalization. Finally, policy makers are still short of rational and well-founded regulatory responses to reconcile the benefits of global banking with a stable global and regional financial development.
This one-day symposium brings together leading experts and practitioners from academia, industry and regulatory bodies with these major intentions: First, to discuss recent advances in research on banking globalization and financial stability. Second, to exchange views on urgent policy and regulatory issues to balance the cost and benefits of global banking. Third, to make these views visible to a broader audience in the profession as well as to policy makers and an interested civil society.
Sponsoring for the symposium by the European Centre for Corporate Engagement (ECCE) and the Graduate School of Business and Economics (GSBE) of Maastricht University, the Institute of Global Business and Society (GLOBUS) at Cologne University of Applied Sciences as well as the Dutch Science Foundation (NWO) is gratefully acknowledged.
In the June 2014, Comparative Economic Studies dedicates a special issue to the symposium. In this special issue the panelists reflect on the symposium discussions and share their views on the lessons learned from the financial crisis of 2008 with the broader audience in the profession as well as with policy makers and an interested civil society. Special thanks are due to CES and the CES editors, in particular Professor Paul Wachtel, to make this special issue possible. The following papers are included in the special issues of Comparative Economic Studies:
Harald Sander and Stefanie Kleimeier, Introduction: Global Banking, Financial Stability, and Post-Crisis Policy Challenges Symposium, Comp Econ Stud 56: 253-256.
Robert McCauley, De-internationalizing Global Banking? Comp Econ Stud 56: 257-270.
Ralph De Haas, The Dark and the Bright Side of Global Banking: A (Somewhat) Cautionary Tale from Emerging Europe, Comp Econ Stud 56: 271-282.
Freddy Van Den Spiegel, Can We Make Global Banks Safer? A Practitioner’s View, Comp Econ Stud 56: 283-294.
Brian M Lucey, Charles Larkin and Constantin Gurdgiev, Learning from the Irish Experience – A Clinical Case Study in Banking Failure, Comp Econ Stud 56: 295-312
Ansgar Belke and Florian Verheyen, The Low-Interest-Rate Environment, Global Liquidity Spillovers and Challenges for Monetary Policy Ahead, Comp Econ Stud 56: 313-334.
Click on the pictures below for interviews taken on February 1, 2013 with Paul Wachtel (New York University) and Hans-Helmut Kotz (Harvard University) in which they discuss the symposium's topics.
The program of the workshop looked as follows:
8:30 am Registration
9:00 am – 9:15 am Opening & Welcome address
Stefanie Kleimeier (Maastricht University & ECCE)
Harald Sander (Cologne University of Applied Sciences & Maastricht School of Management)
9:15 am – 10:45 am Plenary Session 1: Understanding the Globalization of Banking
Chair: Jaap Bos (Maastricht University & ECCE)
10:45 am – 11:15 am Coffee break
Brian Lucey (Trinity College Dublin)
Robert McCauley (Bank of International Settlements)
Ralph de Haas (European Bank for Reconstruction and Development)
11:15 am – 12:45 pm Plenary Session 2: The Role of Global Banking for Financial Stability
Chair: Ansgar Belke (University of Duisburg-Essen & Monetary Expert Panel EU Parliament)
Maria Nieto (Bank of Spain)
Paul Wachtel (New York University)
Freddy Van den Spiegel (Economic Adviros BNP Paribas Fortis)
12:45 pm – 2:00 pm Lunch
2:00 pm – 4:00 pm Plenary Session 3: Policy Lessons from the Financial Crisis – The Road Towards Sustainable Global Banking
Chair: Brian Lucey (Trinity College Dublin)
Iftekhar Hasan (Fordham University)
Ansgar Belke (University of Duisburg-Essen & Monetary Expert Panel EU Parliament)
Cinzia Alcidi (Centre for European Policy Studies)
Hans-Helmut Kotz (Harvard University)
Dirk Schoenmaker (Duisenberg School of Finance)
4.00 pm – 5.00 pm Closing reception