Foreign Currency Lending in Emerging Europe: Bank Level Evidence
AbstractBased on survey data from 193 banks in 20 countries we provide the first bank-level analysis of the determinants of foreign currency (FX) lending in Emerging Europe. We find that FX lending by all banks, regardless of their ownership structure, is strongly determined by the macroeconomic environment. We find no evidence of foreign banks ‘pushing’ FX loans indiscriminately because of easier access to wholesale funding in foreign currency. In fact, while foreign banks do lend more in FX to corporate clients, they do not do so to retail clients. We also find that after a take-over by a foreign bank, the acquired bank does not increase its FX lending any faster than a bank which remains in domestic hands.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2010-135.
Date of creation: 2010
Date of revision:
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Web page: http://center.uvt.nl
Foreign currency lending; currency mismatch; foreign banks; financial stability;
Other versions of this item:
- Martin Brown & Ralph De Haas, 2010. "Foreign currency lending in emerging Europe: bank-level evidence," Working Papers 122, European Bank for Reconstruction and Development, Office of the Chief Economist.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
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