Heterogeneous bank regulatory standards and the cross-border supply of financial services

This paper investigates whether the differences in bank regulatory standards matter for the cross-border supply of financial services. A gravity model of the bilateral exports of financial services is implemented to assess the impact of various factors that measure cross-country differences in the b...

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Bibliographic Details
Published in:Economic modelling 2014-06, Vol.40, p.342-354
Main Author: Bouvatier, Vincent
Format: Article
Language:English
Subjects:
Banking regulation
Banks
Cross-national analysis
Economic models
Economic theory
Economics and Finance
Exports
Financial services
Gravity model
Humanities and Social Sciences
Monitoring
Regulation
Regulation of financial institutions
Regulatory policy
Studies
Trade barriers
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Summary:This paper investigates whether the differences in bank regulatory standards matter for the cross-border supply of financial services. A gravity model of the bilateral exports of financial services is implemented to assess the impact of various factors that measure cross-country differences in the bank regulatory standards. The results show that cross-country heterogeneity in private monitoring impedes the export of financial services. However, this effect remains limited compared to the effect of direct trade barriers. •A gravity model on financial services trade is estimated.•The effect of cross-country differences in bank regulatory standards is analyzed.•Cross-country differences in private monitoring impede exports of financial services.•Cross-country differences in capital requirements and bank supervision have no effect.•Heterogeneity in private monitoring is not the primary factor that impedes trade.
ISSN:0264-9993
1873-6122
DOI:10.1016/j.econmod.2014.04.013