The Resurgence of Cultural Borders during the Financial Crisis: The Changing Geography of Eurozone Cross-Border Depositing

H. Sander, Stefanie Kleimeier, S. Heuchemer

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

We investigate the impact of cultural borders on the geography of international finance during stable and crises times. We employ a unique data set that focuses on Eurozone cross-border depositing during the 1999-2011 period in a gravity-model framework. We find that cultural distance limits international financial integration over and above what can be expected from economic trade and transaction costs. While we provide evidence that cultural borders lost influence during a "Europhoria" phase after the introduction of Euro notes in 2002, our findings indicate that cultural borders resurge during the 2007/2008 financial crisis and severely limit financial integration. (C) 2016 Elsevier B.V. All rights reserved.

Original languageEnglish
Pages (from-to)12-26
Number of pages15
JournalJournal of Financial Stability
Volume24
DOIs
Publication statusPublished - Jun 2016

Keywords

  • culture
  • financial crisis
  • cross-border deposits
  • European single market
  • Gravity model
  • TRADE
  • DETERMINANTS
  • MARKETS
  • Cross-border deposits
  • MONOPOLISTIC COMPETITION
  • Financial crisis
  • BANKING
  • GRAVITY EQUATION
  • INTEGRATION
  • Culture

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