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Foreign Banks and the Vienna Initiative: Turning Sinners Into Saints?

Author

Listed:
  • Mr. Alexander Pivovarsky
  • Ms. Elena Loukoianova
  • Mr. Ralph De Haas
  • Ms. Yevgeniya Korniyenko

Abstract

We use data on 1,294 banks in Central and Eastern Europe to analyze how bank ownership and creditor coordination in the form of 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 Central and Eastern Europe. We show that 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.

Suggested Citation

  • Mr. Alexander Pivovarsky & Ms. Elena Loukoianova & Mr. Ralph De Haas & Ms. Yevgeniya Korniyenko, 2012. "Foreign Banks and the Vienna Initiative: Turning Sinners Into Saints?," IMF Working Papers 2012/117, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:2012/117
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    More about this item

    Keywords

    WP; parent bank; bank subsidiary; government support; credit growth; bank lending; Foreign Banks; Vienna Initiative; Financial Crisis; State Support; VI bank; roll-over commitment; loan-to-deposit ratio; Credit; Bank credit; Loans; Central and Eastern Europe; Europe;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • P34 - Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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