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

Deutsche Bundesbank Discussion Paper No. 04/2004

40 Pages Posted: 18 Oct 2004

See all articles by Frank Heid

Frank Heid

Deutsche Bundesbank

Thorsten Nestmann

University of Mainz - Department of Economics

Beatrice Weder di Mauro

Graduate Institute Geneva, IHEID; Graduate Institute Geneva, IHEID

Natalja von Westernhagen

Deutsche Bundesbank

Multiple version iconThere are 2 versions of this paper

Date Written: October 15, 2004

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: F30, F32, F34

Suggested Citation

Heid, Frank and Nestmann, Thorsten and Weder di Mauro, Beatrice and Weder di Mauro, Beatrice and von Westernhagen, Natalja, German Bank Lending During Emerging Market Crises: A Bank Level Analysis (October 15, 2004). Deutsche Bundesbank Discussion Paper No. 04/2004, Available at SSRN: https://ssrn.com/abstract=605562 or http://dx.doi.org/10.2139/ssrn.605562

Frank Heid

Deutsche Bundesbank ( email )

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

Thorsten Nestmann (Contact Author)

University of Mainz - Department of Economics ( email )

Chair of Corporate Finance
D-55099 Mainz, 55128
Germany

Beatrice Weder di Mauro

Graduate Institute Geneva, IHEID ( email )

Chemin Eugene Rigot 2
Geneva, 1211
Switzerland

Graduate Institute Geneva, IHEID ( email )

Geneva Avenue de la Paix 11A
Geneva, 1202
Switzerland
1211 (Fax)

Natalja Von Westernhagen

Deutsche Bundesbank ( email )

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

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