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Foreign Banks and the Vienna Initiative: Turning Sinners into Saints?

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Author Info

  • Ralph De Haas

    () (European Bank for Reconstruction and Development (EBRD))

  • Yevgeniya Korniyenko

    (Bank of England)

  • Elena Loukoianova

    (International Monetary Fund (IMF))

  • Alexander Pivovarsky

    (European Bank for Reconstruction and Development (EBRD))

Abstract

We use data on 1,294 banks in Emerging Europe to analyze how bank ownership and the so-called Vienna Initiative impacted credit growth during the 2008-09 crisis. As part of the Vienna Initiative western European banks signed country-specific commitment letters in which they pledged to maintain exposures and to support their subsidiaries in Emerging Europe. We show that in general both domestic and foreign banks sharply curtailed credit during the crisis, but that foreign banks that participated in the Vienna Initiative were relatively stable lenders. We find no evidence of negative spillovers from countries where banks signed commitment letters to countries where they did not.

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File URL: http://docs.dises.univpm.it/web/quaderni/pdfmofir/Mofir062.pdf
File Function: First version, 2012
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Bibliographic Info

Paper provided by Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences in its series Mo.Fi.R. Working Papers with number 62.

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Length: 32
Date of creation: Mar 2012
Date of revision:
Handle: RePEc:anc:wmofir:62

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Keywords: Foreign banks; Vienna Initiative; financial crisis; state support;

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  1. Havrylchyk, Olena & Jurzyk, Emilia, 2011. "Inherited or earned? Performance of foreign banks in Central and Eastern Europe," Journal of Banking & Finance, Elsevier, vol. 35(5), pages 1291-1302, May.
  2. Giorgio Barba Navaretti & Giacomo Calzolari & Alberto Franco Pozzolo & Micol Levi, 2010. "Multinational Banking in Europe: Financial Stability and Regulatory Implications;Lessons from the Financial Crisis," Mo.Fi.R. Working Papers 40, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  3. Michael Brei & Leonardo Gambacorta & Goetz von Peter, 2011. "Rescue packages and bank lending," BIS Working Papers 357, Bank for International Settlements.
  4. Ralph De Haas & Neeltje Van Horen, 2012. "International shock transmission after the Lehman Brothers collapse – evidence from syndicated lending," Working Papers 142, European Bank for Reconstruction and Development, Office of the Chief Economist.
  5. Rose, Andrew & Wieladek, Tomasz, 2011. "Financial protectionism: the first tests," Discussion Papers 32, Monetary Policy Committee Unit, Bank of England.
  6. Yulia Makarova & Anna Ilyina & Christian Schmieder & Eugenio Cerutti, 2010. "Bankers Without Borders? Implications of Ring-Fencing for European Cross-Border Banks," IMF Working Papers 10/247, International Monetary Fund.
  7. Charles Goodhart & Dirk Schoenmaker, 2009. "Fiscal Burden Sharing in Cross-Border Banking Crises," International Journal of Central Banking, International Journal of Central Banking, vol. 5(1), pages 141-165, March.
  8. Dinger, Valeriya, 2009. "Do foreign-owned banks affect banking system liquidity risk?," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 647-657, December.
  9. Popov, Alexander & Udell, Gregory F., 2012. "Cross-border banking, credit access, and the financial crisis," Journal of International Economics, Elsevier, vol. 87(1), pages 147-161.
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Cited by:
  1. Berg, Gunhild & Kirschenmann, Karolin, 2012. "Funding vs. real economy shock : the impact of the 2007-2009 crisis on small firms'credit availability," Policy Research Working Paper Series 6030, The World Bank.
  2. Stijn Claessens & Neeltje van Horen, 2013. "Impact of Foreign Banks," DNB Working Papers 370, Netherlands Central Bank, Research Department.
  3. Philip R. Lane, 2012. "Financial Globalisation and the Crisis," BIS Working Papers 397, Bank for International Settlements.

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