State-owned banks and international shock transmission

Marcin Borsuk (), Oskar Kowalewski () and Pawel Pisany ()
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Marcin Borsuk: European Central Bank, Germany Institute of Economics, Polish Academy of Sciences, Poland School of Economics, University of Cape Town, South Africa
Pawel Pisany: Institute of Economics, Polish Academy of Sciences, Poland

No 2021-ACF-10, Working Papers from IESEG School of Management

Abstract: In this study, we employ a new dataset on bank ownership and reassess the links between domestic and foreign ownership and lending during the 1996– 2018 period. Additionally, we distinguish between privately-owned and state-controlled banks and nd that the lending activities of foreign state-controlled and privately-owned banks dier, particularly following the nancial crisis of 2008. Our analysis conrms that foreign state-controlled and privately-owned banks provided credit during domestic banking crises in host countries, whereas lending by domestic state-controlled banks contracted. Further, foreign state-controlled banks reduced their credit base during a home banking crisis, whereas foreign privately-owned banks expanded lending. Hence, we nd that the credit supply of foreign state-controlled and privately-owned banks differs in host countries because of exogenous shocks. We also nd weak evidence that foreign state control can be a transmission channel during a sovereign crisis in the home country. However, we nd no evidence that foreign banks, state-controlled or privately-owned, transmit a currency crisis to a host country. Overall, our results suggest a mixed banking sector comprising foreign and domestic state-controlled banks and privately-owned banks to contribute to nancial stability during domestic and international crises.

Keywords: : foreign banks; state-controlled banks; private banks; credit growth; crisis (search for similar items in EconPapers)
JEL-codes: G01 G21 G28 (search for similar items in EconPapers)
Pages: 42
Date: 2021-10
New Economics Papers: this item is included in nep-cfn, nep-cwa, nep-fdg and nep-mon
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Related works:
Journal Article: State-owned banks and international shock transmission (2024)
Working Paper: State-owned banks and international shock transmission (2024)
Working Paper: State-owned banks and international shock transmission (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ies:wpaper:f202110

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