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Domestic bank intermediation in emerging market economies during the 2008-09 crisis

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  • Dubravko Mihaljek

    (Bank for International Settlements, Basel, Switzerland)

Abstract

This paper analyses bank intermediation in emerging market economies (EMEs) at the height of the 2008-09 global financial crisis. The analysis is based on central bank responses to a BIS questionnaire prepared in July 2009, and thus provides a unique snapshot that can be used for studies of commercial banking activity in EMEs before and after the crisis. EME banks by and large adjusted to the crisis in ways that stabilised their financial positions. On the funding side, they reduced reliance on wholesale markets and sought to attract retail deposits. On the lending side, banks slowed new lending, shifted towards less risky loans and increased their holdings of government bonds. In an effort to boost liquidity, banks shortened the maturity of their assets, relied less on the interbank market and increased the scope of their transactions with central banks. Foreign and domestically-owned banks adjusted to the crisis in similar ways.

Suggested Citation

  • Dubravko Mihaljek, 2014. "Domestic bank intermediation in emerging market economies during the 2008-09 crisis," Financial Theory and Practice, Institute of Public Finance, vol. 38(4), pages 381-404.
  • Handle: RePEc:ipf:finteo:v:38:y:2014:i:4:p:381-404
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    References listed on IDEAS

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    1. John Hawkins & Dubravko Mihaljek, 2001. "The banking industry in the emerging market economies: competition, consolidation and systemic stability: an overview," BIS Papers chapters, in: Bank for International Settlements (ed.),The banking industry in the emerging market economies: competition, consolidation and systemic stability, volume 4, pages 1-44, Bank for International Settlements.
    2. R. T.A. de Haas & I. P.P van Lelyveld, 2004. "Foreign Bank Penetration and Private Sector Credit in Central and Eastern Europe," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 3(2), pages 125-151, August.
    3. Adam Banai & Julia Kiraly & Marton Nagy, 2011. "The demise of the halcyon days in Hungary: “foreign” and “local” banks – before and after the crisis," BIS Papers chapters, in: Bank for International Settlements (ed.),The global crisis and financial intermediation in emerging market economies, volume 54, pages 195-224, Bank for International Settlements.
    4. Dubravko Mihaljek, 2006. "Privatisation, consolidation and the increased role of foreign banks," BIS Papers chapters, in: Bank for International Settlements (ed.),The banking system in emerging economies: how much progress has been made?, volume 28, pages 41-65, Bank for International Settlements.
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    More about this item

    Keywords

    emerging market economies; global financial crisis; bank intermediation; bank business models; domestic-and foreign-owned banks;

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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