Foreigners vs. natives: Bank lending and loan pricing

Thorsten Beck, Vasso P. Ioannidou, Larissa Schäfer, 13 July 2012

Financial aspects of the global crisis and the rolling bank scandals have led many to think again about their reliance on foreign banks. This column presents evidence that foreign banks do act differently. Among other things, they charge lower interest rates, but provide loans for shorter maturities, and are more likely to demand collateral.

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The past two decades have seen a large increase in foreign bank entry across the globe. The increase in foreign bank participation has been especially strong in the transition countries of Central and Eastern Europe and Latin America, reaching well above 80% of the number of banks in several countries (Claessens et al. 2008).

Topics: Global crisis, International finance
Tags: Bolivia, foreign banks, SMEs

2nd MoFiR Workshop on Banking

7 - 8 March 2013, Ancona (Italy)

The aim of the 2nd MoFiR Workshop on Banking is to bring together scholars in banking and finance to discuss the causes, transmission mechanisms, and consequences of the crisis, focusing also on the policy implications for the current situation and the potential reforms.

The organizing committee invites the submission of full papers or extended abstracts on the following themes:

• Financial sector fragility, contagion, safety nets, and crises;
• The (dis-)advantages of cross-border banking;
• Liquidity management and provision by financial intermediaries;
• Banks’ organizational models, informational asymmetries and distance;
• Bank lending, entrepreneurial finance and firm growth;
• Experiments in banking.

Organizer(s):
Andrea F. Presbitero
Type:
Workshop
Location:
Ancona (Italy)
Attendance:
Open attendance
Contact:
mofir@univpm.it
Institution:
Università Politecnica delle Marche and MoFiR
More information:
https://sites.google.com/site/mofirunivpm/home/events/workshop2013

Disclaimer: Vox is not responsible for the accuracy of this information.

Topic(s):
Financial markets, Global crisis, Microeconomic regulation
Tags:
banking, foreign banks, liquidity, SME lending

Foreign banks and the global financial crisis: Investment and lending behaviour

Stijn Claessens, Neeltje van Horen, 31 January 2012

How did foreign banks adjust their investment and lending decisions during the global financial crisis? This column uses a new and comprehensive database to show that the crisis dramatically halted foreign direct investment in banking and that foreign banks often cut back on lending more than their domestic competitors. While exits have so far been limited, this is likely to change in the coming years.

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Foreign banks have in many countries become important sources of financial intermediation. Given this importance, understanding the impact of the financial crisis on foreign-bank behaviour is important. Questions being asked include:

Topics: Global crisis, International finance
Tags: cross-border banking, foreign banks, global crisis, investment

Foreign banks: Trends and impact on financial development

Stijn Claessens, Neeltje van Horen, 28 January 2012

Foreign banks on domestic soil have always been controversial. This column presents a newly collected, comprehensive database on bank ownership for 137 countries over the period 1995–2009. It shows that current market shares of foreign banks average 20% in OECD countries and 50% elsewhere. In developing countries, however, foreign bank presence is correlated with less private credit.

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Although interrupted by the recent financial crisis, the past two decades have seen an unprecedented degree of globalisation, especially in financial services. Cross-border bank and other capital flows have increased dramatically. Many banks have ventured abroad and established a presence in other countries.

Topics: Development, International finance
Tags: cross-border banking, development, foreign banks

Foreign banks and small and medium enterprises: Are they really estranged?

Thorsten Beck, Asli Demirgüç-Kunt, Maria Soledad Martinez Peria, 1 April 2010

Small and medium enterprises are engines of economic growth. But what kind of market structure is more conducive to financing these enterprises? This column argues that different types of bank, applying different types of lending technology and organisational structures can all play a vital role in financing them.

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The financing of small and medium enterprises (SMEs) has been a subject of great interest both to policymakers and researchers because of the significance of SMEs in private sectors around the world and evidence that these firms are financially constrained. According to Ayyagari et al.

Topics: Financial markets, Productivity and Innovation
Tags: foreign banks, Small and medium enterprises

In defence of foreign banks

Ralph De Haas, 28 May 2009

In recent months, foreign-owned banks have been accused of abandoning the emerging markets that have contributed so much to their profitability over the last decade. This column analyses a large bank-level dataset of foreign bank subsidiaries across the world, to compare lending by foreign bank subsidiaries with lending by domestic banks. Importantly, it finds that as a result of parental support, foreign bank subsidiaries do not typically rein in their lending during a financial crisis.

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“Banker” has recently become something of a dirty word and “foreign banker” a most reviled sub-species. In recent months, foreign-owned banks have, amongst other things, been accused of abandoning some of the emerging markets that have contributed so much to their profitability over the last decade.

Topics: International finance
Tags: banks, Eastern and Central Europe, foreign banks

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