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http://ssrn.com/abstract=1085310
 
 

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'Lending by Example': Direct and Indirect Effects of Foreign Banks in Emerging Markets


Mariassunta Giannetti


Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swedish House of Finance

Steven Ongena


University of Zurich and SFI

October 27, 2010

AFA 2009 San Francisco Meetings Paper
Second Singapore International Conference on Finance 2008
ECGI - Finance Working Paper No. 221/2008

Abstract:     
Using a novel dataset that allows us to trace the bank relationships of a sample of mostly unlisted firms, we explore which borrowers are able to benefit from foreign bank presence in emerging markets. Our results suggest that the limits to financial integration are less tight than the static picture of firm-bank relationships implies. Even though foreign banks are more likely to engage large and foreign-owned firms, after an acquisition, a bank is 20 percent less likely to terminate a relationship with a firm if the acquirer is foreign rather than domestic. Most importantly, within a credit market, firms appear to have the same access to financial loans and ability to invest whether they borrow from a foreign bank or not, while foreign banks benefit all firms by indirectly enhancing credit access.

Number of Pages in PDF File: 40

Keywords: foreign bank lending, emerging markets, competition, lending relationships

JEL Classification: F3, G21, L11, L14

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Date posted: March 6, 2008 ; Last revised: October 27, 2010

Suggested Citation

Giannetti, Mariassunta and Ongena, Steven, 'Lending by Example': Direct and Indirect Effects of Foreign Banks in Emerging Markets (October 27, 2010). AFA 2009 San Francisco Meetings Paper; Second Singapore International Conference on Finance 2008; ECGI - Finance Working Paper No. 221/2008. Available at SSRN: http://ssrn.com/abstract=1085310 or http://dx.doi.org/10.2139/ssrn.1085310

Contact Information

Mariassunta Giannetti (Contact Author)
Stockholm School of Economics ( email )
P.O. Box 6501
Sveavagen 65
SE-113 83 Stockholm
Sweden
+46 8 736 9607 (Phone)
+46 8 312 327 (Fax)
HOME PAGE: http://sites.google.com/site/mariassuntagiannetti/Home
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Swedish House of Finance ( email )
Drottninggatan 98
111 60 Stockholm
Sweden

Steven R. G. Ongena
University of Zurich and SFI ( email )
Plattenstrasse 14
Zürich, 8032
Switzerland
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