Foreign bank lending in the U.S. during three U.S. recessions

Anoop Rai, Rama Seth and Sunil K. Mohanty

Global Finance Journal, 2021, vol. 48, issue C

Abstract: We study whether foreign banks engaged in countercyclical lending in the United States during the 1990–1991, 2001, and 2007–2009 recessions. Aggregate lending by foreign banks increased in the 1990–91 recession and by domestic banks in the 2001 recession. Controlling for local GDP and unemployment, we show countercyclical lending by foreign branches in the 1990 recession and by foreign subsidiaries in the 2001 recession. In the 2008 recession, foreign branches and subsidiaries exhibited neither countercyclical nor procyclical lending. We conclude that foreign banks like domestic banks respond to local economic conditions; the foreign ownership is not a factor.

Keywords: Countercyclical lending; Foreign banks; Bank regulation (search for similar items in EconPapers)
JEL-codes: F34 G01 G21 G28 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:48:y:2021:i:c:s1044028319303138

DOI: 10.1016/j.gfj.2020.100536

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