Foreign Bank Behavior During Financial Crises

One of the persistent policy problems faced by governments contemplating financial liberalizations is the question of whether to allow foreign banks entry into the domestic economy. This question has become ever more urgent in recent times, due to...

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Main Authors:	Adams-Kane, Jonathon, Caballero, Julian A., Lim, Jamus Jerome
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2013
Subjects:	ACCESS TO CREDIT ACCOUNTING ASSET PORTFOLIOS ASSETS ASSETS RATIO ASYMMETRIC INFORMATION AUTONOMY BALANCE SHEET BANK BALANCE SHEETS BANK BEHAVIOR BANK CLOSURES BANK CREDIT BANK FAILURES BANK HOLDING BANK HOLDING COMPANIES BANK LENDING BANK LIQUIDATIONS BANK LIQUIDITY BANK NATIONALIZATIONS BANK ORIGIN BANK RESTRUCTURING BANK RUNS BANKING CRISES BANKING CRISIS BANKING REGULATION BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BANKRUPT BUSINESS CYCLE BUSINESS CYCLES CAPITAL FLOWS CAPITAL MARKET CAPITAL MARKETS CAPITAL STRUCTURE CENTRAL BANK CHECKS CLAIM COLLATERAL COLLECTION EFFORT COLLECTION PROCESS COMMERCIAL BANKS COOPERATIVE BANKS CREDIT ACCESS CREDIT ALLOCATION CREDIT PROVISION CRISIS COUNTRIES CRISIS COUNTRY CRISIS LENDING CROSS-BORDER BANKING CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DEPENDENT DEPOSIT DEPOSITS DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT BANK DIRECT OWNERSHIP DOMESTIC BANK DOMESTIC BANKING DOMESTIC BANKS DOMESTIC CURRENCY DOMESTIC FINANCIAL MARKETS DOMESTIC LIQUIDITY ECONOMETRICS ECONOMIC CRISES ECONOMIC POLICY EMERGING ECONOMIES EMERGING MARKET EMERGING MARKETS EMPIRICAL ANALYSIS EXCHANGE RATES EXCLUSION EXPENDITURE EXPORTERS FINANCIAL CONTAGION FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL DISTRESS FINANCIAL GLOBALIZATION FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INTEGRATION FINANCIAL INTERMEDIATION FINANCIAL LIBERALIZATIONS FINANCIAL MARKETS FINANCIAL SERVICES FINANCIAL SHOCKS FINANCIAL STABILITY FINANCIAL STUDIES FINANCIAL SUPPORT FINANCIAL SYSTEM FINANCIERS FINANCING NEEDS FISCAL POLICY FISCAL RESTRUCTURING FOREIGN BANK FOREIGN BANK ENTRY FOREIGN BANK PARTICIPATION FOREIGN BANK PENETRATION FOREIGN BANKS FOREIGN ENTRY FOREIGN LIABILITIES FOREIGN OWNERSHIP GLOBALIZATION HOLDING COMPANY HOST COUNTRIES HOST COUNTRY HOST ECONOMIES HOST ECONOMY INDIVIDUAL BANKS INFLATION INTEREST MARGIN INTERNATIONAL BANK INTERNATIONAL BANK LENDING INTERNATIONAL BANKING INTERNATIONAL CREDIT INTERNATIONAL ECONOMICS INTERNATIONAL SETTLEMENTS JUDGMENT LARGE BANK LENDERS LENDING DECISIONS LIQUIDATIONS LIQUIDITY MANAGEMENT LIQUIDITY PROBLEMS LIQUIDITY SUPPORT LOAN LOAN DEMAND LOAN LOSS LOAN LOSS PROVISIONS LOAN MARKET LOAN PORTFOLIO LOAN RATIO MACRO FACTORS MANDATE MONETARY AUTHORITIES MONETARY FUND MONETARY SHOCKS MULTINATIONAL MULTINATIONAL BANK MULTINATIONAL BANKS MULTINATIONALS NONPERFORMING LOANS NUMBER OF BANKS OFFSHORE FINANCIAL CENTER OUTSTANDING LOANS OWNERSHIP STRUCTURE PARENT COMPANIES PARENT COMPANY PORTFOLIO POST-CRISIS PERIOD POST-CRISIS PERIODS PROFITABILITY RATES OF INFLATION RECESSION REGULATORY POLICY REPATRIATION RESERVES RETURN SHAREHOLDER SMALL BUSINESSES SOLVENCY STATE BANKS STOCK MARKET SUBSIDIARIES SUBSIDIARY SYSTEMIC BANKING CRISES SYSTEMIC BANKING CRISIS SYSTEMIC CRISES TAX TAX REGIME TRADE FLOWS TRANSACTION WHOLESALE FUNDING
Online Access:	http://documents.worldbank.org/curated/en/2013/09/18194151/foreign-bank-behavior-during-financial-crises http://hdl.handle.net/10986/16041

id	okr-10986-16041
recordtype	oai_dc
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ACCESS TO CREDIT ACCOUNTING ASSET PORTFOLIOS ASSETS ASSETS RATIO ASYMMETRIC INFORMATION AUTONOMY BALANCE SHEET BANK BALANCE SHEETS BANK BEHAVIOR BANK CLOSURES BANK CREDIT BANK FAILURES BANK HOLDING BANK HOLDING COMPANIES BANK LENDING BANK LIQUIDATIONS BANK LIQUIDITY BANK NATIONALIZATIONS BANK ORIGIN BANK RESTRUCTURING BANK RUNS BANKING CRISES BANKING CRISIS BANKING REGULATION BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BANKRUPT BUSINESS CYCLE BUSINESS CYCLES CAPITAL FLOWS CAPITAL MARKET CAPITAL MARKETS CAPITAL STRUCTURE CENTRAL BANK CHECKS CLAIM COLLATERAL COLLECTION EFFORT COLLECTION PROCESS COMMERCIAL BANKS COOPERATIVE BANKS CREDIT ACCESS CREDIT ALLOCATION CREDIT PROVISION CRISIS COUNTRIES CRISIS COUNTRY CRISIS LENDING CROSS-BORDER BANKING CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DEPENDENT DEPOSIT DEPOSITS DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT BANK DIRECT OWNERSHIP DOMESTIC BANK DOMESTIC BANKING DOMESTIC BANKS DOMESTIC CURRENCY DOMESTIC FINANCIAL MARKETS DOMESTIC LIQUIDITY ECONOMETRICS ECONOMIC CRISES ECONOMIC POLICY EMERGING ECONOMIES EMERGING MARKET EMERGING MARKETS EMPIRICAL ANALYSIS EXCHANGE RATES EXCLUSION EXPENDITURE EXPORTERS FINANCIAL CONTAGION FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL DISTRESS FINANCIAL GLOBALIZATION FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INTEGRATION FINANCIAL INTERMEDIATION FINANCIAL LIBERALIZATIONS FINANCIAL MARKETS FINANCIAL SERVICES FINANCIAL SHOCKS FINANCIAL STABILITY FINANCIAL STUDIES FINANCIAL SUPPORT FINANCIAL SYSTEM FINANCIERS FINANCING NEEDS FISCAL POLICY FISCAL RESTRUCTURING FOREIGN BANK FOREIGN BANK ENTRY FOREIGN BANK PARTICIPATION FOREIGN BANK PENETRATION FOREIGN BANKS FOREIGN ENTRY FOREIGN LIABILITIES FOREIGN OWNERSHIP GLOBALIZATION HOLDING COMPANY HOST COUNTRIES HOST COUNTRY HOST ECONOMIES HOST ECONOMY INDIVIDUAL BANKS INFLATION INTEREST MARGIN INTERNATIONAL BANK INTERNATIONAL BANK LENDING INTERNATIONAL BANKING INTERNATIONAL CREDIT INTERNATIONAL ECONOMICS INTERNATIONAL SETTLEMENTS JUDGMENT LARGE BANK LENDERS LENDING DECISIONS LIQUIDATIONS LIQUIDITY MANAGEMENT LIQUIDITY PROBLEMS LIQUIDITY SUPPORT LOAN LOAN DEMAND LOAN LOSS LOAN LOSS PROVISIONS LOAN MARKET LOAN PORTFOLIO LOAN RATIO MACRO FACTORS MANDATE MONETARY AUTHORITIES MONETARY FUND MONETARY SHOCKS MULTINATIONAL MULTINATIONAL BANK MULTINATIONAL BANKS MULTINATIONALS NONPERFORMING LOANS NUMBER OF BANKS OFFSHORE FINANCIAL CENTER OUTSTANDING LOANS OWNERSHIP STRUCTURE PARENT COMPANIES PARENT COMPANY PORTFOLIO POST-CRISIS PERIOD POST-CRISIS PERIODS PROFITABILITY RATES OF INFLATION RECESSION REGULATORY POLICY REPATRIATION RESERVES RETURN SHAREHOLDER SMALL BUSINESSES SOLVENCY STATE BANKS STOCK MARKET SUBSIDIARIES SUBSIDIARY SYSTEMIC BANKING CRISES SYSTEMIC BANKING CRISIS SYSTEMIC CRISES TAX TAX REGIME TRADE FLOWS TRANSACTION WHOLESALE FUNDING
spellingShingle	ACCESS TO CREDIT ACCOUNTING ASSET PORTFOLIOS ASSETS ASSETS RATIO ASYMMETRIC INFORMATION AUTONOMY BALANCE SHEET BANK BALANCE SHEETS BANK BEHAVIOR BANK CLOSURES BANK CREDIT BANK FAILURES BANK HOLDING BANK HOLDING COMPANIES BANK LENDING BANK LIQUIDATIONS BANK LIQUIDITY BANK NATIONALIZATIONS BANK ORIGIN BANK RESTRUCTURING BANK RUNS BANKING CRISES BANKING CRISIS BANKING REGULATION BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BANKRUPT BUSINESS CYCLE BUSINESS CYCLES CAPITAL FLOWS CAPITAL MARKET CAPITAL MARKETS CAPITAL STRUCTURE CENTRAL BANK CHECKS CLAIM COLLATERAL COLLECTION EFFORT COLLECTION PROCESS COMMERCIAL BANKS COOPERATIVE BANKS CREDIT ACCESS CREDIT ALLOCATION CREDIT PROVISION CRISIS COUNTRIES CRISIS COUNTRY CRISIS LENDING CROSS-BORDER BANKING CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DEPENDENT DEPOSIT DEPOSITS DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT BANK DIRECT OWNERSHIP DOMESTIC BANK DOMESTIC BANKING DOMESTIC BANKS DOMESTIC CURRENCY DOMESTIC FINANCIAL MARKETS DOMESTIC LIQUIDITY ECONOMETRICS ECONOMIC CRISES ECONOMIC POLICY EMERGING ECONOMIES EMERGING MARKET EMERGING MARKETS EMPIRICAL ANALYSIS EXCHANGE RATES EXCLUSION EXPENDITURE EXPORTERS FINANCIAL CONTAGION FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL DISTRESS FINANCIAL GLOBALIZATION FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INTEGRATION FINANCIAL INTERMEDIATION FINANCIAL LIBERALIZATIONS FINANCIAL MARKETS FINANCIAL SERVICES FINANCIAL SHOCKS FINANCIAL STABILITY FINANCIAL STUDIES FINANCIAL SUPPORT FINANCIAL SYSTEM FINANCIERS FINANCING NEEDS FISCAL POLICY FISCAL RESTRUCTURING FOREIGN BANK FOREIGN BANK ENTRY FOREIGN BANK PARTICIPATION FOREIGN BANK PENETRATION FOREIGN BANKS FOREIGN ENTRY FOREIGN LIABILITIES FOREIGN OWNERSHIP GLOBALIZATION HOLDING COMPANY HOST COUNTRIES HOST COUNTRY HOST ECONOMIES HOST ECONOMY INDIVIDUAL BANKS INFLATION INTEREST MARGIN INTERNATIONAL BANK INTERNATIONAL BANK LENDING INTERNATIONAL BANKING INTERNATIONAL CREDIT INTERNATIONAL ECONOMICS INTERNATIONAL SETTLEMENTS JUDGMENT LARGE BANK LENDERS LENDING DECISIONS LIQUIDATIONS LIQUIDITY MANAGEMENT LIQUIDITY PROBLEMS LIQUIDITY SUPPORT LOAN LOAN DEMAND LOAN LOSS LOAN LOSS PROVISIONS LOAN MARKET LOAN PORTFOLIO LOAN RATIO MACRO FACTORS MANDATE MONETARY AUTHORITIES MONETARY FUND MONETARY SHOCKS MULTINATIONAL MULTINATIONAL BANK MULTINATIONAL BANKS MULTINATIONALS NONPERFORMING LOANS NUMBER OF BANKS OFFSHORE FINANCIAL CENTER OUTSTANDING LOANS OWNERSHIP STRUCTURE PARENT COMPANIES PARENT COMPANY PORTFOLIO POST-CRISIS PERIOD POST-CRISIS PERIODS PROFITABILITY RATES OF INFLATION RECESSION REGULATORY POLICY REPATRIATION RESERVES RETURN SHAREHOLDER SMALL BUSINESSES SOLVENCY STATE BANKS STOCK MARKET SUBSIDIARIES SUBSIDIARY SYSTEMIC BANKING CRISES SYSTEMIC BANKING CRISIS SYSTEMIC CRISES TAX TAX REGIME TRADE FLOWS TRANSACTION WHOLESALE FUNDING Adams-Kane, Jonathon Caballero, Julian A. Lim, Jamus Jerome Foreign Bank Behavior During Financial Crises
relation	Policy Research Working Paper;No. 6590
description	One of the persistent policy problems faced by governments contemplating financial liberalizations is the question of whether to allow foreign banks entry into the domestic economy. This question has become ever more urgent in recent times, due to rapid financial globalization, coupled with the credit contractions experienced as a result of the 2007/08 financial crisis. This paper examines the question of whether opening the financial sector to foreign participation is a good idea for developing countries, using a unique bank-level database of foreign ownership. In particular, the authors examine whether the credit supply of majority foreign-owned financial institutions differ systematically conditional on a crisis event in their home economies. They show that foreign banks that were exposed to crises in their home countries exhibit changes in lending patterns that are lower by between 13 and 42 percent than their non-crisis counterparts.
format	Publications & Research :: Policy Research Working Paper
author	Adams-Kane, Jonathon Caballero, Julian A. Lim, Jamus Jerome
author_facet	Adams-Kane, Jonathon Caballero, Julian A. Lim, Jamus Jerome
author_sort	Adams-Kane, Jonathon
title	Foreign Bank Behavior During Financial Crises
title_short	Foreign Bank Behavior During Financial Crises
title_full	Foreign Bank Behavior During Financial Crises
title_fullStr	Foreign Bank Behavior During Financial Crises
title_full_unstemmed	Foreign Bank Behavior During Financial Crises
title_sort	foreign bank behavior during financial crises
publisher	World Bank, Washington, DC
publishDate	2013
url	http://documents.worldbank.org/curated/en/2013/09/18194151/foreign-bank-behavior-during-financial-crises http://hdl.handle.net/10986/16041
_version_	1764432060596879360
spelling	okr-10986-160412021-04-23T14:03:27Z Foreign Bank Behavior During Financial Crises Adams-Kane, Jonathon Caballero, Julian A. Lim, Jamus Jerome ACCESS TO CREDIT ACCOUNTING ASSET PORTFOLIOS ASSETS ASSETS RATIO ASYMMETRIC INFORMATION AUTONOMY BALANCE SHEET BANK BALANCE SHEETS BANK BEHAVIOR BANK CLOSURES BANK CREDIT BANK FAILURES BANK HOLDING BANK HOLDING COMPANIES BANK LENDING BANK LIQUIDATIONS BANK LIQUIDITY BANK NATIONALIZATIONS BANK ORIGIN BANK RESTRUCTURING BANK RUNS BANKING CRISES BANKING CRISIS BANKING REGULATION BANKING SECTOR BANKING SYSTEM BANKING SYSTEMS BANKRUPT BUSINESS CYCLE BUSINESS CYCLES CAPITAL FLOWS CAPITAL MARKET CAPITAL MARKETS CAPITAL STRUCTURE CENTRAL BANK CHECKS CLAIM COLLATERAL COLLECTION EFFORT COLLECTION PROCESS COMMERCIAL BANKS COOPERATIVE BANKS CREDIT ACCESS CREDIT ALLOCATION CREDIT PROVISION CRISIS COUNTRIES CRISIS COUNTRY CRISIS LENDING CROSS-BORDER BANKING CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DEPENDENT DEPOSIT DEPOSITS DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT BANK DIRECT OWNERSHIP DOMESTIC BANK DOMESTIC BANKING DOMESTIC BANKS DOMESTIC CURRENCY DOMESTIC FINANCIAL MARKETS DOMESTIC LIQUIDITY ECONOMETRICS ECONOMIC CRISES ECONOMIC POLICY EMERGING ECONOMIES EMERGING MARKET EMERGING MARKETS EMPIRICAL ANALYSIS EXCHANGE RATES EXCLUSION EXPENDITURE EXPORTERS FINANCIAL CONTAGION FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL DISTRESS FINANCIAL GLOBALIZATION FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INTEGRATION FINANCIAL INTERMEDIATION FINANCIAL LIBERALIZATIONS FINANCIAL MARKETS FINANCIAL SERVICES FINANCIAL SHOCKS FINANCIAL STABILITY FINANCIAL STUDIES FINANCIAL SUPPORT FINANCIAL SYSTEM FINANCIERS FINANCING NEEDS FISCAL POLICY FISCAL RESTRUCTURING FOREIGN BANK FOREIGN BANK ENTRY FOREIGN BANK PARTICIPATION FOREIGN BANK PENETRATION FOREIGN BANKS FOREIGN ENTRY FOREIGN LIABILITIES FOREIGN OWNERSHIP GLOBALIZATION HOLDING COMPANY HOST COUNTRIES HOST COUNTRY HOST ECONOMIES HOST ECONOMY INDIVIDUAL BANKS INFLATION INTEREST MARGIN INTERNATIONAL BANK INTERNATIONAL BANK LENDING INTERNATIONAL BANKING INTERNATIONAL CREDIT INTERNATIONAL ECONOMICS INTERNATIONAL SETTLEMENTS JUDGMENT LARGE BANK LENDERS LENDING DECISIONS LIQUIDATIONS LIQUIDITY MANAGEMENT LIQUIDITY PROBLEMS LIQUIDITY SUPPORT LOAN LOAN DEMAND LOAN LOSS LOAN LOSS PROVISIONS LOAN MARKET LOAN PORTFOLIO LOAN RATIO MACRO FACTORS MANDATE MONETARY AUTHORITIES MONETARY FUND MONETARY SHOCKS MULTINATIONAL MULTINATIONAL BANK MULTINATIONAL BANKS MULTINATIONALS NONPERFORMING LOANS NUMBER OF BANKS OFFSHORE FINANCIAL CENTER OUTSTANDING LOANS OWNERSHIP STRUCTURE PARENT COMPANIES PARENT COMPANY PORTFOLIO POST-CRISIS PERIOD POST-CRISIS PERIODS PROFITABILITY RATES OF INFLATION RECESSION REGULATORY POLICY REPATRIATION RESERVES RETURN SHAREHOLDER SMALL BUSINESSES SOLVENCY STATE BANKS STOCK MARKET SUBSIDIARIES SUBSIDIARY SYSTEMIC BANKING CRISES SYSTEMIC BANKING CRISIS SYSTEMIC CRISES TAX TAX REGIME TRADE FLOWS TRANSACTION WHOLESALE FUNDING One of the persistent policy problems faced by governments contemplating financial liberalizations is the question of whether to allow foreign banks entry into the domestic economy. This question has become ever more urgent in recent times, due to rapid financial globalization, coupled with the credit contractions experienced as a result of the 2007/08 financial crisis. This paper examines the question of whether opening the financial sector to foreign participation is a good idea for developing countries, using a unique bank-level database of foreign ownership. In particular, the authors examine whether the credit supply of majority foreign-owned financial institutions differ systematically conditional on a crisis event in their home economies. They show that foreign banks that were exposed to crises in their home countries exhibit changes in lending patterns that are lower by between 13 and 42 percent than their non-crisis counterparts. 2013-10-02T21:37:02Z 2013-10-02T21:37:02Z 2013-09 http://documents.worldbank.org/curated/en/2013/09/18194151/foreign-bank-behavior-during-financial-crises http://hdl.handle.net/10986/16041 English en_US Policy Research Working Paper;No. 6590 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research

Foreign Bank Behavior During Financial Crises

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