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Determinants of International Bank Lending from the Developed World to East Asia

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  • Siregar, Reza Yamora
  • Choy, KM

Abstract

The reversal of capital flows from the banking sector, rather than portfolio equity investment, has long been considered a main reason for the severity of the East Asian financial crisis of the late 1990s. This study analyzes the factors behind the boom and bust of bank lending, focusing on loans from private banks in seven OECD countries to nine East Asian economies during the 1990–2004 period. Our findings suggest that political instability and weaknesses in the legal, judicial, and bureaucratic systems help explain the continued stagnation in lending after the financial crisis. Thus, institutional reforms are critical for East Asia to successfully compete for international bank financing.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14989.

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Date of creation: 30 Mar 2009
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Handle: RePEc:pra:mprapa:14989

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Keywords: Foreign Bank Loans; East Asia; Gravity Model; Trade Intensity; Financial Risk; Law and Order; Bureaucratic Quality;

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Citations

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Cited by:
  1. Pontines, Victor & Siregar, Reza Y., 2012. "How Should We Bank With Foreigners?—An Empirical Assessment of Lending Behavior of International Banks to Six East Asian Economies," ADBI Working Papers 386, Asian Development Bank Institute.
  2. Victor Pontines & Reza Siregar, 2011. "Cross-border Bank Lending to Selected SEACEN Economies: An Integrative Report," Staff Papers, South East Asian Central Banks (SEACEN) Research and Training Centre, number sp82, June.
  3. Victor Pontines & Reza Siregar, 2012. "How Should We Bank With Foreigners? An Empirical Assessment of Lending Behaviour of International Banks to Six East Asian Countries," CAMA Working Papers 2012-04, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  4. Siregar, Reza, 2011. "Macro-Prudential Approaches to Banking Regulation: Perspectives of Selected Asian Central Banks," ADBI Working Papers 325, Asian Development Bank Institute.
  5. Wu, Ji & Jeon, Bang Nam & Luca, Alina C., 2010. "Does Distance Affect the Performance of Foreign Banks? Evidence from Multinational Banking in Developing Countries," MPRA Paper 37083, University Library of Munich, Germany, revised 01 Feb 2012.
  6. Siregar, Reza, 2013. "Globalized Banking Sectors: Features and Policy Implications amidst Global Uncertainties," MPRA Paper 43709, University Library of Munich, Germany.
  7. Reza Y. Siregar & C.S. Lim, Vincent, 2011. "Real Sector Propagation of the Recent Global Financial Crisis: An Integrative Report," Staff Papers, South East Asian Central Banks (SEACEN) Research and Training Centre, number sp83, June.
  8. Reza Siregar & Lim, C.S. Vincent, 2011. "Living with Macro-financial Linkages: Policy Perspectives and Challenges for SEACEN Countries," Staff Papers, South East Asian Central Banks (SEACEN) Research and Training Centre, number sp79, June.
  9. Siregar, Reza & Miyaki, Keita, 2013. "Regional Financial Arrangement: An Impetus for Regional Policy Cooperation," MPRA Paper 51050, University Library of Munich, Germany.

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