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

H. Sander; Stefanie Kleimeier; S. Heuchemer

doi:10.1016/j.jfs.2016.04.003

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

H. Sander, Stefanie Kleimeier^*, S. Heuchemer

^*Corresponding author for this work

Finance

Research output: Contribution to journal › Article › Academic › peer-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 language	English
Pages (from-to)	12-26
Number of pages	15
Journal	Journal of Financial Stability
Volume	24
DOIs	https://doi.org/10.1016/j.jfs.2016.04.003
Publication status	Published - 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

Access to Document

10.1016/j.jfs.2016.04.003

Cite this

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

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.",

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author = "H. Sander and Stefanie Kleimeier and S. Heuchemer",

note = "Bank of International Settlements, IFS, ESCB Statistics, Eurostat, http://www.chemical-ecology.net/java/lat-long.htm, Import Export Wizard LLC, CIA World Factbook, World Value Survey, European Values Study, European Social Survey, OECD, World Bank, Financial Stability Board, Eurobarometer, IMF's Direction of Trade Statistics, ",

year = "2016",

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AU - Sander, H.

AU - Kleimeier, Stefanie

AU - Heuchemer, S.

N1 - Bank of International Settlements, IFS, ESCB Statistics, Eurostat, http://www.chemical-ecology.net/java/lat-long.htm, Import Export Wizard LLC, CIA World Factbook, World Value Survey, European Values Study, European Social Survey, OECD, World Bank, Financial Stability Board, Eurobarometer, IMF's Direction of Trade Statistics,

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N2 - 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.

AB - 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.

KW - culture

KW - financial crisis

KW - cross-border deposits

KW - European single market

KW - Gravity model

KW - TRADE

KW - DETERMINANTS

KW - MARKETS

KW - Cross-border deposits

KW - MONOPOLISTIC COMPETITION

KW - Financial crisis

KW - BANKING

KW - GRAVITY EQUATION

KW - INTEGRATION

KW - Culture

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DO - 10.1016/j.jfs.2016.04.003

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JO - Journal of Financial Stability

JF - Journal of Financial Stability

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