Arbeitspapier

Foreign banks as shock absorbers in the financial crisis?

This paper finds that foreign banks can act as a buffer against negative credit supply shocks, in contexts where the domestic credit market is heavily hit by a country-specific adverse shock. A new dataset is constructed, which combines Belgian Credit Register data with firms and banks' balance sheets. After 2008, Belgian firms borrowing from domestic banks experienced a stronger credit contraction (minus 1.8 percentage points) than firms borrowing from foreign banks. Also, foreign banks "cherry-picked" new relationships with more profitable firms to a higher extent during the crisis, and turned down existing relationships more frequently than domestic banks. Results from this paper suggest that foreign banks can mitigate negative financial shocks in countries where domestic financial intermediaries unexpectedly experienced the consequences of the financial crisis to a higher extent.

Language
Englisch

Bibliographic citation
Series: NBB Working Paper ; No. 322

Classification
Wirtschaft
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
International Lending and Debt Problems
Subject
Foreign banks
Financial Crisis
Credit Supply

Event
Geistige Schöpfung
(who)
Barboni, Giorgia
Event
Veröffentlichung
(who)
National Bank of Belgium
(where)
Brussels
(when)
2017

Handle
Last update
10.03.2025, 11:45 AM CET

Data provider

This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.

Object type

  • Arbeitspapier

Associated

  • Barboni, Giorgia
  • National Bank of Belgium

Time of origin

  • 2017

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