Foreign Bank Lending: The Role of Home Country Culture During Prosperous and Crisis Periods
IESEG Working Paper Series 2021-ACF-01
47 Pages Posted: 5 May 2021
Date Written: April 28, 2021
We investigated whether home country culture determines the lending behavior of foreign subsidiaries in host countries during both tranquil and difficult economic times. We employed a dataset of foreign-owned banks originating from 49 home countries and operating in 47 host countries during the period 1996–2018. We found that, in general, only certain dimensions of the home country culture of multinational banks influence lending activities of the foreign bank subsidiaries. However, the impact of home country culture strengthens significantly during crises. Interestingly, we established that the cultural values of the home country are more important than the cultural distances between home and host countries in explaining foreign bank lending attitudes.
Keywords: foreign bank, lending, national culture, crisis
JEL Classification: G01, G21
Suggested Citation: Suggested Citation