Size, productivity, and international banking

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. DOI: https://doi.org/10.1016/j.jinteco.2011.07.001 Posted at the Zurich Open Repository and Archive, University of Zurich ZORA URL: https://doi.org/10.5167/uzh-54289 Published Version Originally published at: Buch, Claudia M; Koch, Cathérine; Koetter, Michael (2011). Size, productivity, and international banking. Journal of International Economics, 85(2):329-334 . DOI: https://doi.org/10.1016/j.jinteco.2011.07.001 Size, productivity, and international banking Claudia M. Buch ⁎, Cathérine T. Koch , Michael Koetter d,e a University of Tuebingen, Faculty of Economics and Social Sciences, Mohlstrasse 36, 72074 Tuebingen, Germany b IAW, Ob dem Himmelreich 1, 72074 Tuebingen, Germany c University of Zurich, Department of Economics, Zuerichbergstrasse 14, 8032 Zurich, Switzerland d University of Groningen & CIBIF, Faculty of Economics and Business, PO Box 800, 9700 AV Groningen, The Netherlands e Sveriges Riksbank, Research Division, 103 37 Stockholm, Sweden a b s t r a c t a r t i c l e i n f o