German Bank Lending During Emerging Market Crises: A Bank Level Analysis

Kredit und Kapital, Vol. 40, No. 3, pp. 381-405, 2007

Posted: 23 Jul 2008

See all articles by B. Weder

B. Weder

affiliation not provided to SSRN

Thorsten Nestmann

University of Mainz - Department of Economics

Natalja von Westernhagen

Deutsche Bundesbank

Frank Heid

Deutsche Bundesbank

Multiple version iconThere are 2 versions of this paper

Date Written: July, 23 2008

Abstract

This paper studies German bank lending during the Asian and Russian crises, using a bank level data set, which has been compiled from credit data at the Deutsche Bundesbank. Our aim is to gain more insight into the pattern of German bank lending during financial crises in emerging markets. We find that German banks reacted to the Asian crisis mainly by reallocating their portfolios among emerging markets. This behaviour is consistent with active portfolio management and does not necessarily indicate a spontaneous reaction to the Asian crisis. By contrast, the banks' behaviour during the Russian crisis is characterised by a general withdrawal from emerging markets. The use of micro data allows us to analyse and to model bank heterogeneity with panel estimation techniques. We find that the lending of large commercial banks was less stable than the lending of public sector banks during the Asian crisis. Differences were not as pronounced during the Russian crisis.

Keywords: Banking, currency crises, emerging markets crises, contagion, financial stability, bank lending

JEL Classification: F30, F32, F34

Suggested Citation

Weder, B. and Nestmann, Thorsten and von Westernhagen, Natalja and Heid, Frank, German Bank Lending During Emerging Market Crises: A Bank Level Analysis (July, 23 2008). Kredit und Kapital, Vol. 40, No. 3, pp. 381-405, 2007, Available at SSRN: https://ssrn.com/abstract=1170993

B. Weder

affiliation not provided to SSRN

Thorsten Nestmann (Contact Author)

University of Mainz - Department of Economics ( email )

Chair of Corporate Finance
D-55099 Mainz, 55128
Germany

Natalja Von Westernhagen

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Frank Heid

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

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