Foreign Banks in Emerging Market Crises: Evidence from Malaysia

25 Pages Posted: 15 Feb 2006

See all articles by Enrica Detragiache

Enrica Detragiache

International Monetary Fund (IMF) - European Department

Poonam Gupta

Delhi School of Economics

Date Written: July 2004

Abstract

Foreign banks have greatly increased their presence in emerging market countries in recent years. This paper compares the performance of domestic banks and a long-established group of foreign banks during the recent crisis in Malaysia. We find that the sharpest differences are between banks mainly active in Asia (including all domestic and some foreign banks) and foreign banks not specialized in Asia. The latter group performed better than the rest during the crisis, maintaining higher profitability thanks to higher interest margins and lower non-performing loans. Foreign banks did not abandon the local market during the crisis and received less government support than domestic institutions.

Keywords: Emerging market banks, foreign banks, banking crises

JEL Classification: G21, G28

Suggested Citation

Detragiache, Enrica and Gupta, Poonam, Foreign Banks in Emerging Market Crises: Evidence from Malaysia (July 2004). IMF Working Paper, Vol. , pp. 1-25, 2004. Available at SSRN: https://ssrn.com/abstract=878954

Enrica Detragiache (Contact Author)

International Monetary Fund (IMF) - European Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Poonam Gupta

Delhi School of Economics ( email )

Department of Economics
Delhi University
Delhi, Delhi 110007
India

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