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German Bank Lending during Emerging Market Crises: A Bank Level Analysis
Heid, Frank | Nestmann, Thorsten | Weder, Beatrice | von Westernhagen, Natalja
Credit and Capital Markets – Kredit und Kapital, Vol. 40 (2007), Iss. 3 : pp. 381–405
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Frank Heid, Frankfurt/M.
Thorsten Nestmann, Mainz
Beatrice Weder, Mainz
Natalja von Westernhagen, Frankfurt/M.
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Abstract
This paper studies the reaction of bank lending in times of higher risk aversion. In particular, we analyse 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 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. In addition, lending of large commercial banks was less stable than the lending of public sector banks. By contrast, banks' behaviour during the Russian crisis is mainly characterised by a general withdrawal from emerging markets. Differences between the banking groups were not as pronounced as during the Asian crisis. (JEL F30, F32, F34)