Dissecting Foreign Bank Lending Behavior During the 2008-2009 Crisis

36 Pages Posted: 20 Apr 2016

See all articles by Moon Jung Choi

Moon Jung Choi

The Bank of Korea; Bank of Korea - Economic Research Institute

Maria Soledad Martinez Peria

International Monetary Fund (IMF)

Eva Gutierrez

World Bank

Multiple version iconThere are 3 versions of this paper

Date Written: October 1, 2013

Abstract

This paper analyzes the lending behavior of foreign-owned banks during the recent global crisis. Using bank-level panel data for countries in Central and Eastern Europe, East Asia, and Latin America, the paper explores the role of affiliate and parent financial characteristics, host location, as well as the impact of parent geographic origin and reach on foreign banks' credit growth. Overall, the analysis finds robust evidence that foreign banks curtailed the growth of credit relative to other banks, independent of the host region. Banks from the United States reduced loan growth less than other parent banks. Neither the global nor regional reach of parent banks influenced the lending growth of foreign affiliates. However, the funding structure of foreign bank affiliates and the capitalization of parent banks do help explain the lending behavior of foreign banks during the global crisis. Although not the focus of the paper, it also finds that government-owned banks played a countercyclical role in all regions.

Keywords: Banks & Banking Reform, Access to Finance, Debt Markets, Bankruptcy and Resolution of Financial Distress, Financial Intermediation

Suggested Citation

Choi, Moon Jung and Martinez Peria, Maria Soledad and Gutierrez, Eva, Dissecting Foreign Bank Lending Behavior During the 2008-2009 Crisis (October 1, 2013). World Bank Policy Research Working Paper No. 6674. Available at SSRN: https://ssrn.com/abstract=2344543

Moon Jung Choi (Contact Author)

The Bank of Korea ( email )

39, Namdaemun-ro, Jung-gu
Seoul, 04531
Korea, Republic of (South Korea)

Bank of Korea - Economic Research Institute ( email )

110, 3-Ga, Namdaemunno, Jung-Gu
Seoul 100-794
Korea, Republic of (South Korea)

Maria Soledad Martinez Peria

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Eva Gutierrez

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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