Financial Crisis Transmission: Foreign Ownership vs. Foreign Funding?
Erik Feyen ()
Additional contact information
Erik Feyen: Financial Systems Department, The World Bank, 1818 H st, NW, Washington DC, 20433, U.S.A.
Review of Economics & Finance, 2016, vol. 6, 63-80
We investigate whether the credit contraction that followed the global financial crisis is due to high foreign bank ownership or high reliance of banks on foreign funding. We apply panel vector auto-regressions to quarterly data for 41 countries, about 11 years, and find that domestic credit growth is highly sensitive to cross-border funding shocks around the world. However, high foreign ownership per se does not appear to increase the sensitivity of credit to foreign funding shocks. Rather, the sensitivity is higher in countries with high reliance on foreign funding and high loan-to-deposit ratios. These findings have important policy implications for many countries involved in cross-border finance.
Keywords: Global financial crisis; Bank credit; Foreign banks; Funding models (search for similar items in EconPapers)
JEL-codes: G01 G21 F36 (search for similar items in EconPapers)
Note: The authors thank Mar¨ªa Soledad Mart¨ªnez Per¨ªa, Stijn Claessens, participants of the June 2013 World Bank ECA region retreat, participants of the University of Hawaii seminar and participants of the 2014 FIRS conference for useful comments and suggestions. All views are those of the authors and do not represent The World Bank or its member countries.
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:bap:journl:160405
Ordering information: This journal article can be ordered from
17 Alton Towers Circle, Unit 101 Toronto, ON, M1V3L8, Canada
Access Statistics for this article
Review of Economics & Finance is currently edited by H. Carlson
More articles in Review of Economics & Finance from Better Advances Press, Canada 17 Alton Towers Circle, Unit 101 Toronto, ON, M1V3L8, Canada.
Series data maintained by Carlson ().