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The Impact of Multinationals on the Size of the Banking System
Author(s) -
Schoenmaker Dirk,
Werkhoven Dewi
Publication year - 2013
Publication title -
kyklos
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.766
H-Index - 58
eISSN - 1467-6435
pISSN - 0023-5962
DOI - 10.1111/kykl.12027
Subject(s) - yardstick , multinational corporation , gross domestic product , business , product (mathematics) , economics , financial crisis , monetary economics , financial system , finance , macroeconomics , geometry , mathematics
Summary After the global financial crisis, the size of the banking sector has become a hotly debated topic. To measure the size of the banking system a country's banking assets divided by the country's gross domestic product ( GDP ) is commonly applied as a general yardstick. This paper shows that this yardstick does not take into account differences in financial needs. In particular, countries differ with regard to the number and size of multinational enterprises. In a cross‐country empirical study, we find a statistically significant relationship between the presence of large banks and the presence of multinationals, after controlling for the size of the country. That is why we develop an additional specific yardstick for firm specific financial needs.