Kiel Working Papers, Kiel Institute for World Economics
No 1012:
Are Banks Different? Evidence from International Data
Claudia M. Buch
Abstract: Pecking order models of international finance suggest that
countries should become less reliant on international bank lending as they
develop. Reduced information costs are one of the factors behind this trend
towards disintermediation. This paper presents a simple model on the choice
between bank debt and bond finance which builds on Rajan (1992), and it
uses two new datasets to test the implications, focusing on bilateral
cross-border bank claims and bond holdings. We find support for the
hypothesis that the state of development of an economy lowers the share of
bank finance. However, evidence on the importance of variables which more
directly measure information costs is less clear-cut.
Keywords: international bank lending, international portfolio investment; (follow links to similar papers)
JEL-Codes: F3; (follow links to similar papers)
27 pages, November 2000
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