Feyen, ErikLetelier, RaquelLove, InessaMaimbo, Samuel MunzeleRocha, Roberto2014-03-182014-03-182014-02https://hdl.handle.net/10986/17341This paper provides new evidence on the factors affecting protracted credit contraction in the wake of the global financial crisis. The paper applies panel vector autoregressions to a global panel that consists of quarterly data for 41 countries for the period 2000-2011 and documents that domestic private credit growth is highly sensitive to cross-border funding shocks around the world. This relationship is significantly stronger in Central and Eastern Europe, a region with considerably stronger foreign presence, higher cross-border funding, and elevated loan-to-deposit ratios compared with the rest of the world. The paper shows that high foreign ownership per se does not appear to explain credit response differences to foreign funding shocks. Rather, there is a stronger response in countries that exhibit high loan-to-deposit ratios and a high reliance on foreign funding relative to local deposits. The results suggest that funding model differences were at the heart of the post-crisis credit contraction in several Central and Eastern European countries. These findings have important regulatory and supervisory implications for emerging countries in Central and Eastern Europe as well as for other countries.en-USCC BY 3.0 IGOACCESS TO FINANCEACCESS TO FINANCIAL SERVICESAFFILIATESASSETSAUSTRIAN NATIONAL BANKAUTOREGRESSIONBALANCE SHEETBALANCE SHEETSBANK CREDITBANK CREDIT GROWTHBANK DEPOSITSBANK LENDINGBANK LENDING BEHAVIORBANK LIABILITIESBANK OWNERSHIPBANK REGULATIONBANKING ASSETSBANKING CRISISBANKING RESTRUCTURINGBANKING SECTORBANKING SYSTEMBANKING SYSTEM ASSETSBANKING SYSTEMSBENCHMARKBONDSBORROWINGBORROWINGSCAPITAL MARKETSCAPITALIZATIONCENTRAL BANKCENTRAL BANKSCONTAGIONCREDIT ACCESSCREDIT CRUNCHCREDIT FLOWSCREDIT GROWTHCREDIT INFORMATIONCREDIT PROVISIONCROSS-BORDER BANKINGDEFLATORSDEMAND FOR CREDITDEPENDENTDEPOSITDEPOSIT BASEDEPOSIT FUNDINGDEPOSIT GROWTHDEPOSITORYDEPOSITSDEPOSITS ACCOUNTDERIVATIVESDEVELOPMENT POLICYDOMESTIC BANKDOMESTIC BANKINGDOMESTIC BANKSDOMESTIC DEPOSITDOMESTIC DEPOSITSECONOMIC ACTIVITYECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC POLICYECONOMIC SHOCKSEMERGING MARKET ECONOMIESEMERGING MARKETSENDOGENOUS VARIABLESEXCHANGE RATEEXPORTSFINANCIAL CRISESFINANCIAL CRISISFINANCIAL DEVELOPMENTFINANCIAL GLOBALIZATIONFINANCIAL INTEGRATIONFINANCIAL INTERMEDIATIONFINANCIAL MARKETFINANCIAL MARKETSFINANCIAL SECTORFINANCIAL SECTOR DEVELOPMENTFINANCIAL SERVICESFINANCIAL STABILITYFINANCIAL SYSTEMFINANCIAL SYSTEMSFOREIGN BANKFOREIGN BANKSFOREIGN LIABILITIESFOREIGN LIABILITYFOREIGN OWNERSHIPFUNDING SOURCEFUNDING SOURCESGDPGDP DEFLATORGROSS DOMESTIC PRODUCTGROWTH RATEHOUSEHOLDSINSTITUTIONAL FRAMEWORKSINTEREST RATEINTERNATIONAL BANKINTERNATIONAL BANKINGINTERNATIONAL BANKSINTERNATIONAL FINANCIAL CRISESINTERNATIONAL FINANCIAL STATISTICSLIABILITIES DEPOSITSLIQUID ASSETSLIQUIDITYLIQUIDITY POSITIONLIQUIDITY SHOCKLOANLOAN MARKETLOAN-TO-DEPOSIT RATIOLOAN-TO-DEPOSIT RATIOSM1MACROECONOMIC POLICIESMARKET ECONOMIESMORTGAGEMULTINATIONALNATIONAL BANKNATIONAL BANK OF SLOVAKIAPRIVATE CREDITREAL GDPREGULATORY AUTHORITIESREGULATORY FRAMEWORKREMITTANCESRESTRUCTURING PROGRAMSRISK FACTORSRULE OF LAWSAVINGSSAVINGS DEPOSITSSECURITIESSOLVENCYSUBSIDIARIESSUBSIDIARYSUPERVISION EQUITYSUPPLY OF CREDITSURCHARGESTERM CREDITUNIONWHOLESALE FUNDING10.1596/1813-9450-6783