Working Paper: CEPR ID: DP5164
Authors: Frank Heid; Thorsten Nestmann; Natalja von Westernhagen; Beatrice Weder
Abstract: This paper studies German bank lending during the Asian and Russian crises, using a bank level data set from 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. By contrast, the banks' behaviour during the Russian crisis is characterised by a general withdrawal from emerging markets. 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: bank lending; banking; contagion; currency crises; emerging markets; crises; financial stability
JEL Codes: F30; F32; F34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Asian crisis (F65) | German banks reallocating portfolios among emerging markets (G15) |
| Crisis in South Korea (H12) | reduced claims on other emerging markets (F69) |
| Russian crisis (F51) | general withdrawal from emerging markets (F69) |
| Russian crisis (F51) | cautious approach towards all emerging markets (F01) |
| Bank type (G21) | lending stability during Asian crisis (F65) |
| Government guarantees (H81) | lending decisions (G21) |
| Russian crisis (F51) | substantial outflows from emerging markets (F32) |