Skip to main content
SpringerLink
Log in

The Dark and the Bright Side of Global Banking: A (Somewhat) Cautionary Tale from Emerging Europe

  • Chapter
Global Banking Crises and Emerging Markets

Abstract

What are the costs and benefits of cross-border banking integration and how has the balance between the two shifted in the aftermath of the global financial crisis? This question is not only of academic interest but also pertinent to policy discussions in the wide range of countries that have opened up their banking sectors to foreign investors over the past three decades. The process of financial globalisation during this period has resulted in high levels of foreign ownership of banks across the world. To name but a few examples, Spanish and Portuguese banks developed a presence in Latin America on the back of the strong cultural and trade links between this region and the Iberian Peninsula. Nigerian and South African

Global banking across the globe

Note: Foreign bank assets as a percentage of total banking assets.

Source: Claessens and Van Horen (2014) and EBRD (2009).

banks created pan-African networks, while many of New Zealand’s banking assets are currently owned by Australian financial institutions.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
eBook
USD 16.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Arena, M, Reinhart, C and Vázquez, F. 2007: The lending channel in emerging economies: Are foreign banks different? IMF Working Paper No. 07, International Monetary Fund: Washington DC.

    Google Scholar 

  • Barajas, A and Steiner, R. 2002: Credit stagnation in Latin America. IMF Working Paper No. 53, International Monetary Fund: Washington DC.

    Google Scholar 

  • Barba Navaretti, G, Calzolari, G, Pozzolo, AF and Levi, M. 2010: Multinational banking in Europe: Financial stability and regulatory implications. Lessons from the financial crisis. Economic Policy 25(64): 703–753.

    Article  Google Scholar 

  • Beck, T, Degryse, H, De Haas, R and Van Horen, N. 2014: When arm’s length is too far. Relationship banking over the business cycle (mimeo).

    Google Scholar 

  • Beck, T, Ioannidou, V and Schäfer, L. 2012: Foreigners vs. natives: Bank lending technologies and loan pricing. CentER Discussion Paper No. 55, Tilburg University.

    Google Scholar 

  • Beck, T and Martinez Peria, MS. 2010: Foreign bank participation and outreach: Evidence from Mexico. Journal of Financial Intermediation 19(1): 52–73.

    Article  Google Scholar 

  • Beltratti, A and Stulz, RM. 2012: The Credit Crisis Around the Globe: Why Did Some Banks Perform Better. Journal of Financial Economics 105(1): 1–17.

    Article  Google Scholar 

  • Berger, AN and Udell, GF. 1995: Relationship lending and lines of credit in small business finance. Journal of Business 68(3): 351–382.

    Article  Google Scholar 

  • Bonin, JP, Hasan, I and Wachtel, P. 2005: Bank performance, efficiency and ownership in transition economies. Journal of Banking & Finance 29(1): 31–53.

    Article  Google Scholar 

  • Brown, M and De Haas, R. 2012: Foreign currency lending in emerging Europe: Bank-level evidence. Economic Policy 27(69): 59–98.

    Article  Google Scholar 

  • Brown, M, De Haas, R and Sokolov, V. 2013: Regional inflation and financial dollarization, EBRD Working Paper No. 163, European Bank for Reconstruction and Development, London.

    Google Scholar 

  • Cetorelli, N and Goldberg, L. 2011: Global banks and international shock transmission: Evidence from the crisis. IMF Economic Review 59(1): 41–76.

    Article  Google Scholar 

  • Cetorelli, N and Goldberg, L. 2012: Liquidity management of US global banks: Internal capital markets in the Great Recession. Journal of International Economics 88(2): 299–311.

    Article  Google Scholar 

  • Cihák, M and Poghosyan, T. 2009: Distress in European banks: An analysis based on a new data set. IMF Working Paper No. WP/09/9, International Monetary Fund, Washington DC.

    Google Scholar 

  • Claessens, S, Demirgüç-Kunt, A and Huizinga, H. 2001: How does foreign entry affect domestic banking markets? Journal of Banking & Finance 25(5): 891–911.

    Article  Google Scholar 

  • Claessens, S and Van Horen, N. 2014: Foreign banks: Trends, impact and financial stability. Journal of Money, Credit and Banking 46(1): 295–326.

    Article  Google Scholar 

  • Cornett, MM, McNutt, JJ, Strahan, PE and Hassan, T. 2011: Liquidity Risk Management and Credit Supply in the Financial Crisis. Journal of Financial Economics 101(2): 297–312.

    Article  Google Scholar 

  • Crystal, JS, Dages, BG and Goldberg, LS. 2002: Has foreign bank entry led to sounder banks in Latin America? Current Issues in Economics and Finance 8(1): 1–6.

    Google Scholar 

  • Cull, R and Martinez Peria, MS. 2007: Foreign bank participation and crises in developing countries. World Bank Policy Research Working Paper No. 4128, World Bank: Washington DC.

    Book  Google Scholar 

  • Dages, BG, Goldberg, LS and Kinney, D. 2000: Foreign and domestic bank participation in emerging markets: Lessons from Mexico and Argentina. Federal Reserve Bank of New York Economic Policy Review (September): 17–36.

    Google Scholar 

  • De Haas, R, Ferreira, D and Taci, A. 2010: What determines the composition of banks’ loan portfolios? Evidence from transition countries. Journal of Banking & Finance 34(2): 388–398.

    Article  Google Scholar 

  • De Haas, R and Kirschenmann, K. 2014: Powerful parents? The local impact of banks’ global business models (mimeo).

    Google Scholar 

  • De Haas, R, Korniyenko, Y, Pivovarsky, A and Tsankova, T. 2014: Taming the herd? Foreign banks, the Vienna initiative and crisis transmission.

    Google Scholar 

  • De Haas, R and Naaborg, I. 2006: Foreign banks in transition countries: To whom do they lend and how are they financed? Financial Markets, Institutions & Instruments 15(4): 159–199.

    Google Scholar 

  • De Haas, R and Van Horen, N. 2012: International shock transmission after the Lehman brothers collapse. Evidence from syndicated lending. American Economic Review Papers & Proceedings 102(3): 231–237.

    Google Scholar 

  • De Haas, R and Van Horen, N. 2013: Running for the exit? International bank lending during a financial crisis. Review of Financial Studies 26(1): 244–285.

    Article  Google Scholar 

  • De Haas, R and Van Lelyveld, I. 2004: Foreign bank penetration and private sector credit in Central and Eastern Europe. Journal of Emerging Market Finance 3(2): 125–151.

    Article  Google Scholar 

  • De Haas, R and Van Lelyveld, I. 2006: Foreign banks and credit stability in Central and Eastern Europe. A panel data analysis. Journal of Banking & Finance 30(7): 1927–1952.

    Google Scholar 

  • De Haas, R and Van Lelyveld, I. 2010: Internal capital markets and lending by multinational bank subsidiaries. Journal of Financial Intermediation 19(1): 1–25.

    Article  Google Scholar 

  • De Haas, R and Van Lelyveld, I. 2014: Multinational banks and the global financial crisis: Weathering the perfect storm? Journal of Money, Credit, and Banking 46(1): 333–364.

    Article  Google Scholar 

  • De la Torre, A, Martínez Pería, MS and Schmukler, SL. 2010: Bank involvement with SMEs: Beyond relationship lending. Journal of Banking & Finance 34(9): 2280–2293.

    Article  Google Scholar 

  • Detragiache, E, Tressel, T and Gupta, P. 2008: Foreign banks in poor countries: Theory and evidence. Journal of Finance 63(5): 2123–2160.

    Article  Google Scholar 

  • EBRD. 2009: Transition report 2009. EBRD: London.

    Google Scholar 

  • Fries, S and Taci, A. 2005: Cost efficiency of banks in transition: Evidence from 289 banks in 15 post-communist countries. Journal of Banking & Finance 29(1): 55–81.

    Article  Google Scholar 

  • García Herrero, A and Martínez Pería, MS. 2007: The mix of international banks’ foreign claims: Determinants and implications. Journal of Banking and Finance 31(6): 1613–1631.

    Article  Google Scholar 

  • Giannetti, M and Ongena, S. 2008: ‘Lending by example’: Direct and indirect effects of foreign banks in emerging markets. Journal of International Economics 86(1): 167–180.

    Article  Google Scholar 

  • Gill, I and Raiser, M. 2012: Golden growth: Restoring the luster of the European economic model. World Bank: Washington DC.

    Google Scholar 

  • Goldberg, LS. 2001: When is US bank lending to emerging markets volatile? NBER Working Paper No. 8209, National Bureau of Economic Research: Cambridge, MA.

    Book  Google Scholar 

  • Gormley, TA. 2010: The impact of foreign bank entry in emerging markets: Evidence from India. Journal of Financial Intermediation 19(1): 26–51.

    Article  Google Scholar 

  • Grubel, HG. 1977: A theory of multinational banking. Banca Nazionale del Lavoro Quarterly Review 123(Dec): 349–363.

    Google Scholar 

  • Havrylchyk, O and Jurzyk, E. 2011: Inherited or earned? Performance of foreign banks in Central and Eastern Europe. Journal of Banking & Finance 35(5): 1291–1302.

    Article  Google Scholar 

  • Ivashina, V and Scharf stein, DS. 2010: Bank Lending During the Financial Crisis of 2008. Journal of Financial Economics 97: 319–338.

    Article  Google Scholar 

  • Iyer, R, Samuel, L, José-Luis, P and Antoinette, S. 2014: The Inter-Bank Liquidity Crunch and the Firm Credit Crunch: Evidence from the 2007–2009 Crisis. Review of Financial Studies 27(1): 347–372.

    Article  Google Scholar 

  • Kalemli-Ozcan, S, Papaioannou, E and Perri, F. 2013: Global banks and crisis transmission. Journal of International Economics 89(2): 495–510.

    Article  Google Scholar 

  • Kamil, H and Rai, K. 2010: The global credit crunch and foreign banks’ lending to emerging markets: Why did Latin America fare better? IMF Working Paper No. 10/102, International Monetary Fund: Washington DC

    Google Scholar 

  • Martinez Peria, S, Powell, A and Vladkova Hollar, I. 2002: Banking on foreigners: The behavior of international bank lending to Latin America, 1985–2000. World Bank Working Paper No. 2893, World Bank: Washington DC.

    Google Scholar 

  • Morgan, D, Rime, B and Strahan, PE. 2004: Bank integration and state business volatility. Quarterly Journal of Economics 119(4): 1555–1585.

    Article  Google Scholar 

  • Morgan, D and Strahan, PE. 2004: Foreign bank entry and business volatility: Evidence from US states and other countries. In: Ahumada, LA and Fuentes, JR (eds). Banking Market Structure and Monetary Policy. Central Bank of Chile: Santiago, pp. 241–269.

    Google Scholar 

  • Ongena, S, Peydro Alcalde, JL and Van Horen, N. 2014: Shocks abroad, pain at home? Bank-firm level evidence on financial contagion during the 2007–2009 Crisis (mimeo).

    Google Scholar 

  • Peek, J and Rosengren, ES. 1997: The international transmission of financial shocks: The case of Japan. American Economic Review 87(4): 495–505.

    Google Scholar 

  • Peek, J and Rosengren, ES. 2000a: Implications of the globalization of the banking sector: The Latin American experience. New England Economic Review (September/October): 45–63.

    Google Scholar 

  • Peek, J and Rosengren, ES. 2000b: Collateral damage: Effects of the Japanese bank crisis on the United States. American Economic Review 90(1): 30–45.

    Article  Google Scholar 

  • Popov, A and Udell, G. 2012: Cross-border banking, credit access, and the financial crisis. Journal of International Economics 87(1): 147–161.

    Article  Google Scholar 

  • Raddatz, C. 2010: When the Rivers Run Dry. Liquidity and the Use of Wholesale Funds in the Transmission of the U.S. Subprime Crisis. Policy Research Working Paper No. 5203, World Bank, Washington DC.

    Google Scholar 

  • Rocholl, J, Puri, M and Steffen, S. 2011: Global retail lending in the aftermath of the US financial crisis: Distinguishing between supply and demand effects. Journal of Financial Economics 100(3): 556–578.

    Article  Google Scholar 

  • Schnabl, P. 2012: Financial globalization and the transmission of bank liquidity shocks: Evidence from an emerging market. Journal of Finance 67(3): 897–932.

    Article  Google Scholar 

  • Van Rijckeghem, C and Weder, B. 2001: Sources of contagion: Is it finance or trade? Journal of International Economics 54(2): 293–308.

    Article  Google Scholar 

  • Yorulmazer, T and Goldsmith-Pinkham, P. 2010: Liquidity, Bank Runs, and Bailouts: Spillover Effects During the Northern Rock Episode. Journal of Financial Services Research 37(2): 83–98.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. One Exchange Square, EBRD, London, EC2A 2JN, UK

    Ralph de Haas

Authors
  1. Ralph de Haas
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. Arizona State University, USA

    Josef C. Brada (Professor of Economics) (Professor of Economics)

  2. Leonard N. Stern School of Business, New York University, USA

    Paul Wachtel (Professor of Economics) (Professor of Economics)

Copyright information

© 2016 Ralph de Haas

About this chapter

Cite this chapter

de Haas, R. (2016). The Dark and the Bright Side of Global Banking: A (Somewhat) Cautionary Tale from Emerging Europe. In: Brada, J.C., Wachtel, P. (eds) Global Banking Crises and Emerging Markets. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-137-56905-9_2

Download citation

Publish with us

Policies and ethics

Search

Navigation