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

Author

Listed:
  • Markus Hameter

    () (Oesterreichische Nationalbank, Credit Division)

  • Mathias Lahnsteiner

    () (Oesterreichische Nationalbank, Foreign Research Division)

  • Ursula Vogel

    () (Frankfurt School of Finance & Management)

Abstract

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.

Suggested Citation

  • Markus Hameter & Mathias Lahnsteiner & Ursula Vogel, 2012. "Intra-Group Cross-Border Credit and Roll-Over Risks in CESEE – Evidence from Austrian Banks," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 23, pages 72-87.
  • Handle: RePEc:onb:oenbfs:y:2012:i:23:b:3
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    File URL: https://www.oenb.at/dam/jcr:ae013b5f-cc95-4bec-9998-d964bf72433f/fsr_23_special_topics_03_tcm16-249138.pdf
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    References listed on IDEAS

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    1. 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.
    2. Sabine Herrmann & Dubravko Mihaljek, 2010. "The determinants of cross-border bank flows to emerging markets: new empirical evidence on the spread of financial crises," BIS Working Papers 315, Bank for International Settlements.
    3. Ralph De Haas & Neeltje Van Horen, 2012. "International Shock Transmission after the Lehman Brothers Collapse: Evidence from Syndicated Lending," American Economic Review, American Economic Association, vol. 102(3), pages 231-237, May.
    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. repec:onb:oenbwp:y:2008:i:16:b:1 is not listed on IDEAS
    6. repec:ebd:wpaper:142 is not listed on IDEAS
    7. 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 1413-1442, September.
    8. Nicola Cetorelli & Linda S Goldberg, 2011. "Global Banks and International Shock Transmission: Evidence from the Crisis," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 59(1), pages 41-76, April.
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    Citations

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    Cited by:

    1. Markus Eller & Florian Huber & Helene Schuberth, 2016. "Weathering global shocks and macrofinancial vulnerabilities in emerging Europe: Comparing Turkey and Poland," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 46-65.
    2. Adalbert Winkler, 2014. "Finance, growth and crisis: a European perspective," Chapters,in: Financial Cycles and the Real Economy, chapter 12, pages 199-216 Edward Elgar Publishing.

    More about this item

    Keywords

    Financial stability; banking sector; Central and Eastern Europe; refinancing; funding; capital flows; roll-over; financial crisis;

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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