Why Did Public Banks Lend More During the Global Financial Crisis?

37 Pages Posted: 23 Jul 2020

See all articles by Joshua Bosshardt

Joshua Bosshardt

Federal Housing Finance Agency

Eugenio Cerutti

International Monetary Fund (IMF); Johns Hopkins University

Date Written: June 1, 2020

Abstract

During the Global Financial Crisis (GFC), state-owned or public banks lent relativelymore than domestic private banks in many countries. However, data limitations havehindered a thorough assessment of what led public banks to better maintain lendingduring the GFC. Using a novel bank-level dataset covering 25 emerging marketeconomies, we show that public banks lent relatively more during the GFC becausethey pursued an objective of helping to stabilize the economy, rather than because theyhad superior fundamentals or access to public or depositors' funding. Nonetheless,their countercyclical behavior seems unique to the GFC rather than a regularcharacteristic of public banks before and after the GFC.

JEL Classification: G01, G21, H11, H44, E01, M41, F16

Suggested Citation

Bosshardt, Joshua and Cerutti, Eugenio, Why Did Public Banks Lend More During the Global Financial Crisis? (June 1, 2020). IMF Working Paper No. 20/84, Available at SSRN: https://ssrn.com/abstract=3652502

Joshua Bosshardt (Contact Author)

Federal Housing Finance Agency ( email )

400 7th Street SW
Washington, DC 20552
United States

Eugenio Cerutti

International Monetary Fund (IMF) ( email )

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

Johns Hopkins University ( email )

Baltimore, MD 21218
United States

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