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Intra-Group Cross-Border Credit and Roll-Over Risks in CESEE – Evidence from Austrian Banks

  • Markus Hameter


    (Oesterreichische Nationalbank, Credit Division)

  • Mathias Lahnsteiner


    (Oesterreichische Nationalbank, Foreign Research Division)

  • Ursula Vogel


    (Frankfurt School of Finance & Management)

During the last decade several CESEE countries built up high external liabilities vis-à-vis foreign banking sectors, with Austrian banks being important creditors. The provision of crossborder credit allowed for rapid financial deepening in many of these countries but also led to a build-up of vulnerabilities to negative spillovers. This study points out that Austrian banks granted a considerable part of direct cross-border credit to affiliated borrowers in CESEE, in particular to their own bank subsidiaries. To our knowledge, this is the first paper that examines the differences between direct cross-border lending to affiliates and direct crossborder lending to nonaffiliates. Our analysis shows that intra-group cross-border credit from Austrian banks was more stable than lending to nonaffiliated borrowers during the 2008/09 financial crisis period. We argue that this is due to lower information asymmetries and parent banks’ efforts to provide their subsidiaries with liquidity in times of financial distress to support their investments.

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Article provided by Oesterreichische Nationalbank (Austrian Central Bank) in its journal Financial Stability Report.

Volume (Year): (2012)
Issue (Month): 23 ()
Pages: 72-87

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Handle: RePEc:onb:oenbfs:y:2012:i:23:b:3
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  1. Asim Ijaz Khwaja & Atif Mian, 2008. "Tracing the Impact of Bank Liquidity Shocks: Evidence from an Emerging Market," American Economic Review, American Economic Association, vol. 98(4), pages 1413-42, September.
  2. repec:ebd:wpaper:142 is not listed on IDEAS
  3. repec:onb:oenbwp:y:2008:i:16:b:1 is not listed on IDEAS
  4. Ralph De Haas & Neeltje Van Horen, 2013. "Running for the Exit? International Bank Lending During a Financial Crisis," Review of Financial Studies, Society for Financial Studies, vol. 26(1), pages 244-285.
  5. Nicola Cetorelli & Linda S. Goldberg, 2010. "Global banks and international shock transmission: evidence from the crisis," Staff Reports 446, Federal Reserve Bank of New York.
  6. Herrmann, Sabine & Mihaljek, Dubravko, 2011. "The determinants of cross-border bank flows to emerging markets: New empirical evidence on the spread of financial crises," BOFIT Discussion Papers 3/2011, Bank of Finland, Institute for Economies in Transition.
  7. repec:ebd:wpaper:124 is not listed on IDEAS
  8. Erik Berglof & Yevgeniya Korniyenko & Alexander Plekhanov & Jeromin Zettelmeyer, 2010. "Understanding the Crisis in Emerging Europe," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 6(6), pages 985-1008, September.
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