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Foreign banks and the Vienna Initiative: turning sinners into saints

  • Ralph De Haas

    ()

    (EBRD)

  • Yevgeniya Korniyenko

    (Bank of England)

  • Elena Loukoianova

    (IMF)

  • Alexander Pivovarsky

    (EBRD)

We use data on 1,294 banks in emerging Europe to analyse how bank ownership and the Vienna Initiative affected credit growth during the 2008-09 crisis. As part of the Vienna Initiative western European banks signed country-specific commitment letters in which they pledged to maintain exposures and to support their subsidiaries in emerging Europe. We show that in general both domestic and foreign banks sharply curtailed credit during the crisis, but that foreign banks that participated in the Vienna Initiative were relatively stable lenders. We find no evidence of negative spillovers from countries where banks signed commitment letters to countries where they did not.

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Paper provided by European Bank for Reconstruction and Development, Office of the Chief Economist in its series Working Papers with number 143.

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Length: 42 pages
Date of creation: Mar 2012
Date of revision:
Publication status: Published in Working papers 143, European Bank for Reconstruction and Development
Handle: RePEc:ebd:wpaper:143
Contact details of provider: Postal: One Exchange Square, London EC2A 2JN
Web page: http://www.ebrd.com/pages/research/publications/workingpapers.shtml
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  1. 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.
  2. Stephen Morris & Hyun Song Shin, 2003. "Catalytic Finance: When Does It Work?," Cowles Foundation Discussion Papers 1400, Cowles Foundation for Research in Economics, Yale University.
  3. Rose, Andrew & Wieladek, Tomasz, 2011. "Financial protectionism: the first tests," Discussion Papers 32, Monetary Policy Committee Unit, Bank of England.
  4. Michael Brei & Leonardo Gambacorta & Goetz von Peter, 2011. "Rescue packages and bank lending," BIS Working Papers 357, Bank for International Settlements.
  5. Sudheer Chava & Amiyatosh Purnanandam, 2006. "The effect of a banking crisis on bank-dependent borrowers," Proceedings 1030, Federal Reserve Bank of Chicago.
  6. Giancarlo Corsetti & Bernardo Guimaraes & Nouriel Roubini, 2003. "International Lending of Last Resort and Moral Hazard: A Model of IMF's Catalytic Finance," NBER Working Papers 10125, National Bureau of Economic Research, Inc.
  7. 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.
  8. Yulia Makarova & Anna Ilyina & Christian Schmieder & Eugenio Cerutti, 2010. "Bankers without Borders? Implications of Ring-Fencing for European Cross-Border Banks," IMF Working Papers 10/247, International Monetary Fund.
  9. Joe Peek & Eric S. Rosengren, 2000. "Implications of the globalization of the banking sector: the Latin American experience," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 45-62.
  10. Ralph de Haas & Iman van Lelyveld, 2003. "Foreign Banks and Credit Stability in Central and Eastern Europe: A Panel Data Analysis," DNB Staff Reports (discontinued) 109, Netherlands Central Bank.
  11. Dinger, Valeriya, 2009. "Do foreign-owned banks affect banking system liquidity risk?," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 647-657, December.
  12. Ralph de Haas & Iman van Lelyveld, 2011. "Multinational Banks and the Global Financial Crisis. Weathering the Perfect Storm?," DNB Working Papers 322, Netherlands Central Bank, Research Department.
  13. Olena Havrylchyk & Emilia Jurzyk, 2008. "Inherited or Earned? Performance of Foreign Banks in Central and Eastern Europe," Working Papers 2008-16, CEPII research center.
  14. Alejandro Micco & Ugo Panizza, 2004. "Bank Ownership and Lending Behavior," IDB Publications (Working Papers) 6686, Inter-American Development Bank.
  15. Martin Brown & Ralph De Haas, 2012. "Foreign banks and foreign currency lending in emerging Europe," Economic Policy, CEPR;CES;MSH, vol. 27(69), pages 57-98, 01.
  16. Fries, Steven & Taci, Anita, 2005. "Cost efficiency of banks in transition: Evidence from 289 banks in 15 post-communist countries," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 55-81, January.
  17. Popov, Alexander & Udell, Gregory F., 2012. "Cross-border banking, credit access, and the financial crisis," Journal of International Economics, Elsevier, vol. 87(1), pages 147-161.
  18. Ralph De Haas & Neeltje Van Horen, 2012. "International shock transmission after the Lehman Brothers collapse – evidence from syndicated lending," Working Papers 142, European Bank for Reconstruction and Development, Office of the Chief Economist.
  19. Charles Goodhart & Dirk Schoenmaker, 2009. "Fiscal Burden Sharing in Cross-Border Banking Crises," International Journal of Central Banking, International Journal of Central Banking, vol. 5(1), pages 141-165, March.
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