The Determinants of Cross-Border Lending in the Euro Zone

S. Heuchemer, S. Kleimeier, H. Sander

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8 Citations (Scopus)

Abstract

We investigate the determinants of cross-border lending in the euro zone with a focus on the potentially limiting role of cultural and political factors. Employing a unique data set of european cross-border loans, the study uses various specifications of gravity models, which are subsequently augmented by societal proxies. Although trade-theoretic and financial development reasoning can explain part of the surge in cross-border lending, we demonstrate that distance and borders still matter. Moreover, we identify cultural differences and different legal family origin as important barriers to further integration in the euro zone.
Original languageEnglish
Pages (from-to)467-499
Number of pages32
JournalComparative Economic Studies
Volume51
Issue number4
DOIs
Publication statusPublished - 1 Jan 2009

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