Taming the herd? Foreign banks, the Vienna Initiative and crisis transmission

Ralph De Haas, Yevgeniya Korniyenko, Alexander Pivovarsky and Teodora Tsankova

Journal of Financial Intermediation, 2015, vol. 24, issue 3, 325-355

Abstract: We use detailed data on over 350 banks in emerging Europe to analyze how bank ownership and the Vienna Initiative impacted credit growth during the Great Recession. 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 while both domestic and foreign banks sharply curtailed credit during the financial crisis, 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.

Keywords: Global banking; Vienna Initiative; Financial crisis (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (49)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:24:y:2015:i:3:p:325-355

DOI: 10.1016/j.jfi.2014.05.003

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