Credit to Private Sector, Interest Spread and Volatility in Credit-Flows: Do Bank Ownership and Deposits Matter?
AbstractWith bank-level data from 81 developing countries, the paper shows that increased foreign bank presence is associated with increased reliance on non-deposit based funding, which leads to higher interest rate spreads, less credit to the private sector, and higher volatility in bank loans. Foreign bank entry significantly reduces domestic banks’ share of deposits while foreign banks typically allocate less of their assets and deposits to lending. As domestic banks lose their deposit base, they rely on non-deposit based funding, but its higher costs and uncertainty force domestic banks to reduce their lending activities.
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Bibliographic InfoPaper provided by United Nations, Department of Economics and Social Affairs in its series Working Papers with number 105.
Length: 42 pages
Date of creation: May 2011
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Web page: http://www.un.org/en/development/desa/working-papers.html
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Financial development; foreign banks; deposits; financial regulation; central banks;
Find related papers by JEL classification:
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
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- Balmaceda, Felipe & Fischer, Ronald D. & Ramirez, Felipe, 2014.
"Financial liberalization, market structure and credit penetration,"
Journal of Financial Intermediation,
Elsevier, vol. 23(1), pages 47-75.
- Felipe Balmaceda & Ronald Fischer & Felipe Ramirez, 2013. "Financial liberalization, market structure and credit penetration," Working Papers 41, Facultad de Economía y Empresa, Universidad Diego Portales.
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