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Journal of Financial Intermediation Vol. 24 No. 3 2015

Taming the herd? Foreign banks, the Vienna Initiative and crisis transmission

Ralph De Haas; Yevgeniya Korniyenko1; Alexander Pivovarsky2,1; Teodora Tsankova1

1 European Bank for Reconstruction and Development · 2 Harvard University Press

open access

Abstract

We use detailed data on over 350 banks in emerging Europe to analyze how bank ownership and the Vienna Initiative impacted credit growth during the Great Recession. As part of the Vienna Initiative, western European banks signed country-specific commitment letters in which they pledged to maintain exposures and to support their subsidiaries in emerging Europe. We show that while both domestic and foreign banks sharply curtailed credit during the financial crisis, foreign banks that participated in the Vienna Initiative were relatively stable lenders. We find no evidence of negative spillovers from countries where banks signed commitment letters to countries where they did not.

DOI
10.1016/j.jfi.2014.05.003
Volume
24
Issue
3
Pages
325-355
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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