Publication:
Dissecting Foreign Bank Lending Behavior During the 2008-2009 Crisis

Loading...
Thumbnail Image
Files in English
English PDF (904.65 KB)
372 downloads
English Text (105.07 KB)
68 downloads
Date
2013-10
ISSN
Published
2013-10
Abstract
This paper analyzes the lending behavior of foreign-owned banks during the recent global crisis. Using bank-level panel data for countries in Central and Eastern Europe, East Asia, and Latin America, the paper explores the role of affiliate and parent financial characteristics, host location, as well as the impact of parent geographic origin and reach on foreign banks' credit growth. Overall, the analysis finds robust evidence that foreign banks curtailed the growth of credit relative to other banks, independent of the host region. Banks from the United States reduced loan growth less than other parent banks. Neither the global nor regional reach of parent banks influenced the lending growth of foreign affiliates. However, the funding structure of foreign bank affiliates and the capitalization of parent banks do help explain the lending behavior of foreign banks during the global crisis. Although not the focus of the paper, it also finds that government-owned banks played a countercyclical role in all regions.
Link to Data Set
Citation
Choi, Moon Jung; Gutierrez, Eva; Martinez Peria, Maria Soledad. 2013. Dissecting Foreign Bank Lending Behavior During the 2008-2009 Crisis. Policy Research Working Paper;No. 6674. © World Bank, Washington, DC. http://hdl.handle.net/10986/16889 License: CC BY 3.0 IGO.
Report Series
Report Series
Other publications in this report series
  • Publication
    Fuel Subsidy Reforms
    (Washington, DC: World Bank, 2024-10-07) Bambe, Bao We Wal; Bou Habib, Chadi; Marandino Peregalli, Joaquin
    Global oil prices have surged in recent decades, significantly hurting household living standards. In response to rising prices, many governments introduced fuel price subsidy to protect the most vulnerable populations. The literature is almost unanimous that fuel price subsidies are inefficient and generate significant socioeconomic and environmental costs. However, it is also acknowledged that subsidies often represent a significant proportion of poor households’ income, so removing them can have devastating effects. Moreover, given that fuel is a key input to economic activity, removing subsidies would alter the cost structure of specific sectors, with impacts on employment, competitiveness, and, ultimately, households’ welfare. One important question then is how policy makers can reduce the distorting effects of fuel subsidies while implementing effective measures to curb the adverse effects of price rises on the economy and poor households. This paper reviews the literature on this issue, discusses alternative policies to fuel subsidies, and provides scenarios that simulate cost and price shocks and fiscal savings for fuel subsidy reforms in Angola. Using an input-output table, the analysis estimates that gradual removal of the subsidies until full removal would result in a cumulative price increase of around 5.0 percent. The highest increases would be in fisheries and transportation (20 percent on average). Fully compensating for the price increase in the two sectors would absorb around 30 percent of the savings (around 1.0 percent of gross domestic product), notwithstanding the form and channel this compensation would take. This sector granularity is crucial to anticipate the potential negative effects of subsidy removals for various social and economic groups involved with a given sector as users or as producers.
  • Publication
    Tax Compliance in Romania
    (Washington, DC: World Bank, 2024-10-07) Robayo-Abril, Monica; Balaban, Georgiana; Wronski, Marcin
    This paper uses statistical matching techniques to assess tax compliance and underreporting of labor income in Romania, overall and for different population groups, including among minimum wage workers, to understand the distributional implications and its links with minimum wage policy and design. Understanding the extent and distribution of tax evasion is relevant for enhancing domestic tax capacity, its redistributive impacts, and the links with social policy, including minimum wage policy. Estimating the average underreporting of income is challenging due to the significant underrepresentation of top incomes in survey data. After censoring, the average underreporting of income is 6 percent. When looking at the distribution of tax evasion, the analysis also shows significant underreporting of income in the bottom half of the income distribution. The results show that tax-reported income at the median of the income distribution equals only 90 percent of the true (survey) income, and at the 25th percentile, this share is 83 percent. Women are more tax compliant than men. Tax compliance varies across sectors of the economy, regions of the country, and demographic groups. Transport, construction, and food and accommodation are the sectors of the economy with the lowest tax compliance. The underreporting of income results in lower fiscal capacity for the country and may also lower the efficiency of means-tested social assistance. The underreporting of income significantly increases the share of minimum wage earners, which may impact the minimum wage policy.
  • Publication
    Mapping the Risk Posed to Groundwater-Dependent Ecosystems by Uncontrolled Access to Photovoltaic Water Pumping in Sub-Saharan Africa
    (Washington, DC: World Bank, 2024-10-01) Zuffinetti, Guillaume; Meunier, Simon
    Photovoltaic-powered groundwater pumping offers a transformative solution for water services in underserved areas. However, without proper regulation, this technology could overexploit groundwater resources, threatening the groundwater-dependent ecosystems that rely on them. Often overlooked in development planning and water allocation, groundwater-dependent ecosystems hold significant socioeconomic and environmental importance. This study maps the risk to groundwater-dependent ecosystems in Sub-Saharan Africa from uncontrolled access to photovoltaic groundwater pumping using the analytic hierarchy process. It evaluates risks using data on irradiance, groundwater, and population, and novel data on groundwater-dependent ecosystems. Two scenarios are analyzed to improve the robustness of the findings. The results show that 92 percent of Sub-Saharan Africa’s groundwater-dependent ecosystems risk overexploitation if photovoltaic water pumping is implemented without proper controls. Groundwater-dependent ecosystems in Southern and Eastern Africa, particularly in South Africa and Namibia, are found to face higher risks, while those in Gabon, the Republic of Congo, and southern Nigeria tend to be less at risk. Comparing these results with populations relying on unimproved water sources highlights regions like southern Nigeria and South Sudan, which could be prioritized for potential photovoltaic water pumping system investments due to their higher groundwater development needs and lower risks to groundwater-dependent ecosystems. Conversely, areas like Namibia and South Africa, with lower groundwater development needs but higher risks to groundwater-dependent ecosystems, should require targeted investments and very close groundwater monitoring. These findings can help policy makers in targeting investments in photovoltaic water pumping systems and identifying regions needing careful monitoring to ensure sustainable groundwater use and minimal impact on groundwater-dependent ecosystems.
  • Publication
    Long-Term and Lasting Impacts of Personal Initiative Training on Entrepreneurial Success
    (Washington, DC: World Bank, 2024-10-01) Campos, Francisco; Frese, Michael; Iacovone, Leonardo; Johnson, Hillary C.; McKenzie, David; Mensmann, Mona
    A randomized experiment in Togo found that personal initiative training for small businesses resulted in large and significant impacts for both men and women after two years (Campos et al, 2017). This paper revisits these entrepreneurs after seven years, and finds long-lasting average impacts of personal initiative training of $91 higher profits per month, which is larger than the 2-year impacts. However, these long-term impacts are very different for men and women: the impact for men grows over time as they accumulate more capital and increase self-efficacy, whereas the impact for women dissipates, and capital build-up is much more limited.
  • Publication
    Using Poverty Lines to Measure Refugee Self-Reliance
    (Washington, DC: World Bank, 2024-09-30) Hoogeveen, Johannes; Hopper, Robert
    Humanitarian models of refugee assistance increasingly promote refugee self-reliance without offering a clear understanding of what constitutes self-reliance, or how to measure it, although measurement is essential to assess whether the promotion of self-reliance has been successful. This paper proposes an approach to measuring self-reliance rooted in global poverty measurement: a refugee is self-reliant if their self-earned income exceeds the locally relevant poverty line. In its empirical application, the paper uses estimates of self-reliance drawn from 11 consumption surveys, which present the universe of data that can be used for such purposes. Refugees in middle-income countries are found to be far more likely to be self-reliant than those in lower income countries, while refugees residing in urban and non-camp settings demonstrate higher levels of self-reliance than those in rural and camp environments, reflecting the presence of greater economic opportunities outside camps and in urban areas. The paper also finds evidence that aid and self-reliance are inversely correlated, with more aid spent in environments where refugee self-reliance is constrained. The paper argues that a different outcome should be envisaged, one in which governments that encourage refugees to be self-reliant receive more aid. Such an approach would be beneficial for refugees, who would gain financial autonomy, and for host country citizens, who often face high levels of poverty and at times are even poorer than refugees.
Journal
Journal Volume
Journal Issue
Associated URLs
Associated content
Citations