This paper examines the impact of bank ownership on credit growth in developing countries before and during the 2008–2009 crisis. Using bank-level data for countries in Eastern Europe and Latin America, we analyze the growth of banks’ total gross loans as well as the growth of corporate, consumer, and residential mortgage loans. While domestic private banks in Eastern Europe and Latin America contracted their loan growth rates during the crisis, there are notable differences in foreign and government-owned bank credit growth across regions. In Eastern Europe, foreign bank total lending fell by more than domestic private bank credit. These results are primarily driven by reductions in corporate loans. Furthermore, government-owned banks in Eastern Europe did not act counter-cyclically. The opposite is true in Latin America, where the growth of government-owned banks’ corporate and consumer loans during the crisis exceeded that of domestic and foreign banks. Contrary to the case of foreign banks in Eastern Europe, those in Latin America did not fuel loan growth prior to the crisis. Also, there are less pronounced and robust differences in the behavior of foreign and domestic banks during the crisis in Latin America.

We analyze the cross-country determinants and financial stability implications of the mix of international banks’ foreign claims. We distinguish between local claims – extended by host country affiliates – and cross-border claims – booked outside the receiving country. Using data on Italian, Spanish, and US banks’ foreign claims, we find that the share of local claims is driven by restrictions on banking sector openness and by local scale economies/business opportunities. The impact of limits on property rights, entry requirements, start-up and informational costs is less robust. Finally, foreign claim volatility is lower in countries with a larger share of local claims.

We examine the factors influencing international banks’ organizational form, using an original database on the operations in Latin America and Eastern Europe of the world’s top 100 banks. We find that banks are more likely to operate as branches in countries that have higher taxes and lower regulatory restrictions on bank entry and on foreign branches. Subsidiary operations are preferred by banks seeking to penetrate host markets by establishing large retail operations. Finally, economic and political risks have opposite effects, suggesting that legal differences in parent banks’ responsibilities associated with branches and subsidiaries are important determinants of banks’ organizational form.

The “conventional wisdom” in academic and policy circles argues that, while large and foreign banks are generally not interested in serving SMEs, small and niche banks have an advantage because they can overcome SME opaqueness through relationship lending. This paper shows that there is a gap between this view and what banks actually do. Banks perceive SMEs as a core and strategic business and seem well-positioned to expand their links with SMEs. The intensification of bank involvement with SMEs in various emerging markets is neither led by small or niche banks nor highly dependent on relationship lending. Moreover, it has not been derailed by the 2007–2009 crisis. Rather, all types of banks are catering to SMEs and large, multiple-service banks have a comparative advantage in offering a wide range of products and services on a large scale, through the use of new technologies, business models, and risk management systems.

This paper studies how firms from developed and developing countries have used domestic and international corporate bond markets since the 1990s. We find that debt issues in domestic and international markets have different characteristics. International issues tend to be larger, of shorter maturity, denominated in foreign currency, include more fixed rate contracts, and entail lower yields. These patterns persist even when analyzing issues by firms from countries with more developed domestic markets and higher financial integration and when comparing issues conducted by the same firm in different markets. These findings are consistent with the existence of frictions that segment domestic and international corporate bond markets and with these markets providing distinct financial services.

The COVID-19 pandemic could result in large government interventions in the banking industry. To shed light on the possible consequences on markups, we rely on the experience of the Global Financial Crisis and exploit granular data on government interventions in more than 800 banks across 27 countries between 2007 and 2017. Using a multivariate matching method, we find no evidence of an increase in markups. Interventions—especially longer and larger ones—have no significant impact on prices but they increase costs, mostly because of higher loan impairment charges, lowering markups.