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Do Foreign Banks Stabilize Cross-Border Bank Flows and Domestic Lending in Emerging Markets? Evidence from the Global Financial Crisis

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  • Ursula Vogel

    (Frankfurt School of Finance & Management, Sonnemannstrasse 9–11, Frankfurt 60314, Germany.)

  • Adalbert Winkler

    (Frankfurt School of Finance & Management, Sonnemannstrasse 9–11, Frankfurt 60314, Germany.)

Abstract

Foreign banks have increased their market share in many emerging markets since the mid-1990s. We analyse the stability implications of foreign banks for cross-border and domestic bank lending in the global financial crisis. Our results suggest that a higher foreign bank presence was associated with more stable cross-border bank flows. This result is largely driven by two regions: Eastern Europe and Sub-Saharan Africa. However, we fail to find similar evidence for domestic bank lending. This indicates that the financial stability benefits of a stronger foreign bank presence in emerging markets did not spill over from cross-border flows to domestic lending.

Suggested Citation

  • Ursula Vogel & Adalbert Winkler, 2012. "Do Foreign Banks Stabilize Cross-Border Bank Flows and Domestic Lending in Emerging Markets? Evidence from the Global Financial Crisis," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 54(3), pages 507-530, September.
    • Handle: RePEc:pal:compes:v:54:y:2012:i:3:p:507-530
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    Cited by:

    1. Bindseil, Ulrich & Winkler, Adalbert, 2012. "Dual liquidity crises under alternative monetary frameworks: a financial accounts perspective," Working Paper Series 1478, European Central Bank.
    2. Ghosh, Amit, 2017. "How does banking sector globalization affect economic growth?," International Review of Economics & Finance, Elsevier, vol. 48(C), pages 83-97.
    3. Ulrich Bindseil & Adalbert Winkler, 2013. "Dual Liquidity Crises—A Financial Accounts Framework," Review of International Economics, Wiley Blackwell, vol. 21(1), pages 151-163, February.
    4. Adalbert Winkler, 2014. "Finance, growth and crisis: a European perspective," Chapters, in: Ewald Nowotny & Doris Ritzberger-Grünwald & Peter Backé (ed.),Financial Cycles and the Real Economy, chapter 12, pages 199-216, Edward Elgar Publishing.

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