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Foreign Bank Identity: Does it Matter for Credit Growth?

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  • Caroline Mehigan

    () (Department of Economics, Trinity College Dublin)

Abstract

This paper provides robust evidence that the home country identity of a foreign-owned bank is an important consideration for credit growth. Among the set of foreign-owned banks we find significant differences in loan growth between banks from advanced than emerging source countries during the Global Financial Crisis. Further, we provide evidence that the regulatory framework prevailing in the home country is correlated with loan growth in the host economy. We show that foreign-owned banks from source countries with higher capital regulatory requirements were associated with significantly less loan growth pre-crisis, but provided a buffer during the crisis.

Suggested Citation

  • Caroline Mehigan, 2016. "Foreign Bank Identity: Does it Matter for Credit Growth?," Trinity Economics Papers tep0716, Trinity College Dublin, Department of Economics.
  • Handle: RePEc:tcd:tcduee:tep0716
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    File URL: http://www.tcd.ie/Economics/TEP/2016/TEP0716.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Cross-border banking; Foreign-owned banks; Credit growth; Crises.;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F30 - International Economics - - International Finance - - - General
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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