Allen, Franklin and Jackowicz, Krzysztof and Kowalewski, Oskar (2013): The effects of foreign and government ownership on bank lending behavior during a crisis in Central and Eastern Europe. Published in: Wharton Financial Institutions Center Working Paper No. 13-25 (30 June 2013)
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Abstract
We examine whether foreign-owned and government-owned banks in Central and Eastern Europe reacted differently during a domestic systematic banking crisis and the global financial crisis of 2008. Our panel dataset comprises data on more than 400 banks for the period 1994- 2010. Our analysis shows that foreign banks provided credit during domestic banking crises in host countries, while government-owned banks contracted. In contrast, foreign-owned banks reduced their credit base during the global financial crisis, while government-owned banks expanded. Consequently, our results show that foreign-owned banks may contribute to financial stability during domestic crisis episodes, but also increase the risk of importing instability from abroad during a crisis in their home markets. However, government-owned banks may substitute for foreign-owned banks and hinder the transmission of international shocks. Thus, our results indicate that a mixed banking sector consisting of foreign-owned and government-owned banks is most advisable.
| Item Type: | MPRA Paper |
|---|---|
| Original Title: | The effects of foreign and government ownership on bank lending behavior during a crisis in Central and Eastern Europe |
| English Title: | The effects of foreign and government ownership on bank lending behavior during a crisis in Central and Eastern Europe |
| Language: | English |
| Keywords: | foreign banks, government-owned banks, credit growth, crisis, emerging market |
| Subjects: | F - International Economics > F3 - International Finance > F36 - Financial Aspects of Economic Integration G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages P - Economic Systems > P3 - Socialist Institutions and Their Transitions > P34 - Financial Economics |
| Item ID: | 48059 |
| Depositing User: | Oskar Kowalewski |
| Date Deposited: | 05 Jul 2013 21:18 |
| Last Modified: | 26 Sep 2019 10:49 |
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| URI: | https://mpra.ub.uni-muenchen.de/id/eprint/48059 |
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