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Lending growth during the financial crisis and the sovereign debt crisis: The role of bank ownership type

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  • Meriläinen, Jari-Mikko

Abstract

This study examines lending growth in Western European banks over the 2004–2013 period. Using a panel of 18 Western European countries, the study investigates how lending growth was affected by the 2008–2009 financial crisis and the subsequent sovereign debt crisis. Banks are classified into four groups based on ownership type: commercial banks, cooperative banks, private savings banks and publicly owned savings banks. The results suggest that both the financial crisis and the sovereign debt crisis caused a negative shock in Western European lending growth. The shock was weakened by stakeholder banks whose lending growth either did not decrease during the two crises or decreased substantially less than that of commercial banks. Additionally, the results are particularly strong for cooperative banks. Furthermore, stakeholder banks did not contribute to excess credit growth in the lead-up to the two crises. Given their large market shares, stakeholder banks diminish the procyclicality of the banking sector.

Suggested Citation

  • Meriläinen, Jari-Mikko, 2016. "Lending growth during the financial crisis and the sovereign debt crisis: The role of bank ownership type," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 41(C), pages 168-182.
  • Handle: RePEc:eee:intfin:v:41:y:2016:i:c:p:168-182
    DOI: 10.1016/j.intfin.2015.12.011
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    References listed on IDEAS

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    2. Abuzayed, Bana & Ben Ammar, Mouldi & Molyneux, Philip & Al-Fayoumi, Nedal, 2024. "Corruption, lending and bank performance," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 802-830.

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    More about this item

    Keywords

    Banks; Financial stability; Lending; Ownership type;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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