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Foreign Banks and the Vienna Initiative

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Author Info

  • Ralph De Haas
  • Yevgeniya Korniyenko
  • Alexander Pivovarsky
  • Elena Loukoianova

Abstract

We use data on 1,294 banks in Central and Eastern Europe to analyze how bank ownership and creditor coordination in the form of the Vienna Initiative affected 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 Central and Eastern Europe. We show that 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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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 12/117.

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Length: 41
Date of creation: 01 May 2012
Date of revision:
Handle: RePEc:imf:imfwpa:12/117

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Keywords: Bank supervision; Credit expansion; Eastern Europe; Global Financial Crisis 2008-2009; subsidiaries; banking; bank subsidiaries; capital markets; bank lending; bank ownership; bank groups; national bank; bank group; bank size; bank of england; state bank; bank entry; tier 1 capital; capital ratio; capital adequacy; banking systems; capital adequacy ratio; bank of greece; european investment bank; banking sector; global capital markets; investment bank; banking model; international capital markets; working capital; local capital markets; sovereign risk; banks ? loan; bank funding; banks ? balance sheets; municipal bank; bank regulators; bank liquidity; international capital; banking crises; banking sector stability; bank exposure; bankers; banking assets; income statement; banking environment; recapitalization; bank subsidiary; private capital; net interest margin; bank branches; banking system; bank-firm relationships; central banking; macroeconomic stability; bank for international settlements; bank financing; banking crisis; inflation rate; equity participation; bank supervisors; guaranteed bonds; moral hazard; deposit insurance; foreign exchange; bank commitment;

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References

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  1. Brei, Michael & Gambacorta, Leonardo & von Peter, Goetz, 2013. "Rescue packages and bank lending," Journal of Banking & Finance, Elsevier, Elsevier, vol. 37(2), pages 490-505.
  2. Barba Navaretti, Giorgio & Calzolari, Giacomo & Pozzolo, Alberto Franco, 2011. "Multinational Banking in Europe - Financial Stability and Regulatory Implications: Lessons from the financial crisis," Economics & Statistics Discussion Papers esdp11056, University of Molise, Dept. EGSeI.
  3. Eugenio Cerutti & Anna Ilyina & Yulia Makarova & Christian Schmieder, 2010. "Bankers Without Borders? Implications of Ring-Fencing for European Cross-Border Banks," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum, SUERF - The European Money and Finance Forum.
  4. Dinger, Valeriya, 2009. "Do foreign-owned banks affect banking system liquidity risk?," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 647-657, December.
  5. Ralph de Haas & Iman van Lelyveld, 2006. "Internal Capital Markets and Lending by Multinational Bank Subsidiaries," DNB Working Papers, Netherlands Central Bank, Research Department 101, Netherlands Central Bank, Research Department.
  6. Havrylchyk, Olena & Jurzyk, Emilia, 2011. "Inherited or earned? Performance of foreign banks in Central and Eastern Europe," Journal of Banking & Finance, Elsevier, Elsevier, vol. 35(5), pages 1291-1302, May.
  7. Ralph De Haas & Neeltje Van Horen, 2012. "International shock transmission after the Lehman Brothers collapse – evidence from syndicated lending," Working Papers, European Bank for Reconstruction and Development, Office of the Chief Economist 142, European Bank for Reconstruction and Development, Office of the Chief Economist.
  8. Alejandro Micco & Ugo Panizza, 2006. "Bank Ownership and Lending Behavior," Working Papers Central Bank of Chile, Central Bank of Chile 369, Central Bank of Chile.
  9. Giancarlo Corsetti & Bernardo Guimaraes & Nouriel Roubini, 2003. "International Lending of Last Resort and Moral Hazard: A Model of IMF's Catalytic Finance," NBER Working Papers 10125, National Bureau of Economic Research, Inc.
  10. Popov, Alexander & Udell, Gregory F., 2012. "Cross-border banking, credit access, and the financial crisis," Journal of International Economics, Elsevier, Elsevier, vol. 87(1), pages 147-161.
  11. Ralph de Haas & Iman van Lelyveld, 2011. "Multinational Banks and the Global Financial Crisis. Weathering the Perfect Storm?," DNB Working Papers, Netherlands Central Bank, Research Department 322, Netherlands Central Bank, Research Department.
  12. Rose, Andrew & Wieladek, Tomasz, 2011. "Financial protectionism: the first tests," Discussion Papers, Monetary Policy Committee Unit, Bank of England 32, Monetary Policy Committee Unit, Bank of England.
  13. Charles Goodhart & Dirk Schoenmaker, 2009. "Fiscal Burden Sharing in Cross-Border Banking Crises," International Journal of Central Banking, International Journal of Central Banking, International Journal of Central Banking, vol. 5(1), pages 141-165, March.
  14. de Haas, Ralph & van Lelyveld, Iman, 2006. "Foreign banks and credit stability in Central and Eastern Europe. A panel data analysis," Journal of Banking & Finance, Elsevier, Elsevier, vol. 30(7), pages 1927-1952, July.
  15. Sudheer Chava & Amiyatosh Purnanandam, 2006. "The effect of a banking crisis on bank-dependent borrowers," Proceedings, Federal Reserve Bank of Chicago 1030, Federal Reserve Bank of Chicago.
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Citations

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Cited by:
  1. Ulrich Bindseil & Adalbert Winkler, 2013. "Dual Liquidity Crises—A Financial Accounts Framework," Review of International Economics, Wiley Blackwell, Wiley Blackwell, vol. 21(1), pages 151-163, 02.
  2. Philip Lane, 2013. "Financial Globalisation and the Crisis," Open Economies Review, Springer, Springer, vol. 24(3), pages 555-580, July.
  3. Camlica, Ferhat & Orman, Cuneyt & Payzanoglu, Durukan & Yucel, Eray, 2012. "Southeastern Europe: post-crisis prospects and risks," MPRA Paper 45539, University Library of Munich, Germany.
  4. Brown, Martin, 2013. "The transmission of banking crises to households : lessons from the 2008-2011 crises in the ECA region," Policy Research Working Paper Series 6528, The World Bank.
  5. Allen, Franklin & Jackowicz, Krzysztof & Kowalewski, Oskar, 2013. "The effects of foreign and government ownership on bank lending behavior during a crisis in Central and Eastern Europe," MPRA Paper 48059, University Library of Munich, Germany.
  6. Claessens, Stijn & Van Horen, Neeltje, 2013. "Impact of Foreign Banks," Journal of Financial Perspectives, EY Global FS Institute, EY Global FS Institute, vol. 1(1), pages 29-42.
  7. Vivek Arora & Karl Habermeier & Jonathan D. Ostry & Rhoda Weeks-Brown, 2013. "La liberalización y el manejo de los flujos de capital: una visión institucional," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, Universidad Externado de Colombia - Facultad de Economía, vol. 15(28), pages 205-255, January-J.

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