Cultural distance and cross-border bank linkages |
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Authors: | Ngoc Thang Doan Thanh Ha Le Trung Thanh To Thi Nam Thang Truong Thi Thanh Huyen Nguyen |
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Affiliation: | 1. Banking Academy of Vietnam, No.12 Chua Boc, Dong Da Dist, Hanoi, Viet Nam;2. National Economics University, No. 207 Giai Phong, Hai Ba Trung Dist, Hanoi, Viet Nam |
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Abstract: | This study investigates the effect of cultural distance on global bank linkages using country-pair data for the period 1990–2013. We followed Schwartz (2006) to measure cultural distance, and employed the number of bank pairs involved in cross-border syndicated lending from the source to target countries as a measure of bank linkages. We found that cultural distance has a negative association with bank linkages. This effect is stronger in countries featuring higher informational asymmetries, as represented by weaker institutions, higher uncertainty, or revolution shocks. Our results hold even when employing alternative measures of bank linkages and cultural distance, and when considering the potential endogeneity of cultural distance. |
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Keywords: | Cultural distance Financial network International banking Uncertainty |
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