Quotation Leibrecht, Markus, Scharler, Johann. 2009. Banks, Financial Markets and International Consumption Risk Sharing. Vienna University of Economics and B.A. Department of Economics Working Paper Series.


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Abstract

In this paper we empirically explore how characteristics of the domestic financial system influence the international allocation of consumption risk using a sample of OECD countries. Our results show that the extent of risk sharing achieved does not depend on the overall development of the domestic financial system per se. Rather, it depends on how the financial system is organized. Specifically, we find that countries characterized by developed financial markets are less exposed to idiosyncratic risk, whereas the development of the banking sector contributes little to the international diversification of consumption risk. We also find that countries with market-based financial systems manage to share a significantly larger fraction of their country-specific risk than bank-based economies.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Working/discussion paper, preprint
Language English
Title Banks, Financial Markets and International Consumption Risk Sharing
Title of whole publication Vienna University of Economics and B.A. Department of Economics Working Paper Series
Year 2009
URL http://www.wu.ac.at/inst/vw1/papers/wu-wp128.pdf

Associations

Projects
F2013: Linking Infrastructure and Taxes as Determinants of Multinational Activity: An Empirical Study of Foreign Direct Investment in Central and Eastern European Countries
People
Leibrecht, Markus (Former researcher)
External
Scharler, Johann (Universität Linz, Department für VWL, Austria)
Organization
Institute for Public Sector Economics IN (Details)
Research Institute for International Taxation FI (Details)
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