Multinational Banks and the Global Financial Crisis. Weathering the Perfect Storm?
We use data on the 48 largest multinational banking groups to compare the lending of their 199 foreign subsidiaries during the Great Recession with lending by a benchmark group of 202 domestic banks. Contrary to earlier, more contained crises, parent banks were not a significant source of strength to their subsidiaries during the 2008-09 crisis. As a result, multinational bank subsidiaries had to slow down credit growth about twice as fast as domestic banks. This was in particular the case for subsidiaries of banking groups that relied more on wholesale market funding. Domestic banks were better equipped to continue lending because of their greater use of deposits, a relatively stable funding source during the crisis.We conclude that while multinational banks may contribute to financial stability during local crisis episodes, they also increase the risk of 'importing' instability from abroad.
|Date of creation:||Nov 2011|
|Contact details of provider:|| Postal: Postbus 98, 1000 AB Amsterdam|
Web page: http://www.dnb.nl/en/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ralph de Haas & Iman van Lelyveld, 2006.
"Internal Capital Markets and Lending by Multinational Bank Subsidiaries,"
DNB Working Papers
101, Netherlands Central Bank, Research Department.
- de Haas, Ralph & van Lelyveld, Iman, 2010. "Internal capital markets and lending by multinational bank subsidiaries," Journal of Financial Intermediation, Elsevier, vol. 19(1), pages 1-25, January.
- De Haas, Ralph & van Lelyveld, Iman, 2009. "Internal Capital Markets and Lending by Multinational Bank Subsidiaries," MPRA Paper 13164, University Library of Munich, Germany.
- Eugenio Cerutti & Anna Ilyina & Yulia Makarova & Christian Schmieder, 2010.
"Bankers Without Borders? Implications of Ring-Fencing for European Cross-Border Banks,"
Chapters in SUERF Studies,
SUERF - The European Money and Finance Forum.
- Yuliya Makarova & Anna Ilyina & Christian Schmieder & Eugenio M Cerutti, 2010. "Bankers Without Borders? Implications of Ring-Fencing for European Cross-Border Banks," IMF Working Papers 10/247, .
- Giorgio Barba Navaretti & Giacomo Calzolari & Alberto Franco Pozzolo & Micol Levi, 2010.
"Multinational Banking in Europe: Financial Stability and Regulatory Implications;Lessons from the Financial Crisis,"
Mo.Fi.R. Working Papers
40, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
- Giorgio Barba Navaretti & Giacomo Calzolari & Alberto Franco Pozzolo & Micol Levi, 2010. "Multinational banking in Europe - financial stability and regulatory implications: lessons from the financial crisis," Economic Policy, CEPR;CES;MSH, vol. 25, pages 703-753, October.
- Barba Navaretti, Giorgio & Calzolari, Giacomo & Pozzolo, Alberto Franco, 2011. "Multinational Banking in Europe - Financial Stability and Regulatory Implications: Lessons from the financial crisis," Economics & Statistics Discussion Papers esdp11056, University of Molise, Dept. EGSeI.
- Barba Navaretti, Giorgio & Calzolari, Giacomo & Levi, Micol & Pozzolo, Alberto, 2010. "Multinational Banking in Europe: Financial Stability and Regulatory Implications Lessons from the Financial Crisis," CEPR Discussion Papers 7823, C.E.P.R. Discussion Papers.
- Giorgio Barba Navaretti & Giacomo Calzolari & Alberto Franco Pozzolo & Micol Levi, 2010. "Multinational Banking in Europe: Financial Stability and Regulatory Implications. Lessons from the Financial Crisis," Development Working Papers 292, Centro Studi Luca d'Agliano, University of Milano, revised 30 Apr 2010.
- Nicola Cetorelli & Linda S. Goldberg, 2010.
"Global banks and international shock transmission: evidence from the crisis,"
446, Federal Reserve Bank of New York.
- 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.
- Nicola Cetorelli & Linda S. Goldberg, 2010. "Global Banks and International Shock Transmission: Evidence from the Crisis," NBER Working Papers 15974, National Bureau of Economic Research, Inc.
- Rose, Andrew & Wieladek, Tomasz, 2011.
"Financial protectionism: the first tests,"
32, Monetary Policy Committee Unit, Bank of England.
- Donald Morgan & Bertrand Rime & Philip Strahan, 2003.
"Bank Integration and State Business Cycles,"
NBER Working Papers
9704, National Bureau of Economic Research, Inc.
- Hausman, Jerry A. & Taylor, William E., 1981.
"Panel data and unobservable individual effects,"
Journal of Econometrics,
Elsevier, vol. 16(1), pages 155-155, May.
- Fabian Valencia & Luc Laeven, 2008. "Systemic Banking Crises; A New Database," IMF Working Papers 08/224, .
- Rocco Huang & Lev Ratnovski, 2009. "Why Are Canadian Banks More Resilient?," IMF Working Papers 09/152, .
- Arellano, Manuel & Bover, Olympia, 1995.
"Another look at the instrumental variable estimation of error-components models,"
Journal of Econometrics,
Elsevier, vol. 68(1), pages 29-51, July.
- M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
- Sandra E. Black & Philip E. Strahan, 2002. "Entrepreneurship and Bank Credit Availability," Journal of Finance, American Finance Association, vol. 57(6), pages 2807-2833, December.
- Joe Peek & Eric S. Rosengren, 1996.
"The International Transmission of Financial Shocks: The Case of Japan,"
Boston College Working Papers in Economics
357, Boston College Department of Economics.
- Peek, Joe & Rosengren, Eric S, 1997. "The International Transmission of Financial Shocks: The Case of Japan," American Economic Review, American Economic Association, vol. 87(4), pages 495-505, September.
- Joe Peek & Eric S. Rosengren, 1996. "The international transmission of financial shocks: the case of Japan," Working Papers 96-1, Federal Reserve Bank of Boston.
- Chava, Sudheer & Purnanandam, Amiyatosh, 2011.
"The effect of banking crisis on bank-dependent borrowers,"
Journal of Financial Economics,
Elsevier, vol. 99(1), pages 116-135, January.
- Sudheer Chava & Amiyatosh Purnanandam, 2006. "The effect of a banking crisis on bank-dependent borrowers," Proceedings 1030, Federal Reserve Bank of Chicago.
- Murillo Campello, 2002. "Internal Capital Markets in Financial Conglomerates: Evidence from Small Bank Responses to Monetary Policy," Journal of Finance, American Finance Association, vol. 57(6), pages 2773-2805, December.
- Eric S. Rosengren & Joe Peek, 2000. "Collateral Damage: Effects of the Japanese Bank Crisis on Real Activity in the United States," American Economic Review, American Economic Association, vol. 90(1), pages 30-45, March.
- Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-1426, November.
- Boyd, John H. & Levine, Ross & Smith, Bruce D., 2001. "The impact of inflation on financial sector performance," Journal of Monetary Economics, Elsevier, vol. 47(2), pages 221-248, April.
- Fenghua Song & Anjan V. Thakor, 2007. "Relationship Banking, Fragility, and the Asset-Liability Matching Problem," Review of Financial Studies, Society for Financial Studies, vol. 20(6), pages 2129-2177, November.
- Donald P. Morgan & Bertrand Rime & Philip E. Strahan, 2004. "Bank Integration and State Business Cycles," The Quarterly Journal of Economics, Oxford University Press, vol. 119(4), pages 1555-1584.
- Aiyar, Shekhar, 2011. "How did the crisis in international funding markets affect bank lending? Balance sheet evidence from the United Kingdom," Bank of England working papers 424, Bank of England.
When requesting a correction, please mention this item's handle: RePEc:dnb:dnbwpp:322. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rob Vet)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.