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Uncertainty and International Banking

Lena Tonzer, Claudia Buch and Manuel Buchholz

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: We develop a new measure of uncertainty derived from bank-level data. We apply the measure of firm-level uncertainty developed by Bloom and others (2012) to banking. Uncertainty is measured as the cross-sectional dispersion of shocks to banking-sector specific variables. We then analyze how uncertainty in banking affects lending by domestic and foreign-owned banks. We find that, first, higher uncertainty in banking has negative effects on bank lending. Second, the effect is heterogeneous across banks: Lending by banks which are better capitalized and have higher liquidity buffers tends to be affected less. Third, foreign-owned banks do not react differently to uncertainty in the host country compared to domestically-owned banks.

JEL-codes: F34 G01 G21 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-ban and nep-ifn
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Journal Article: Uncertainty, Bank Lending, and Bank-Level Heterogeneity (2015) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc15:113072

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