Book chapter
FOREIGN BANKS, MONETARY POLICY, AND CRISES: EVIDENCE FROM BANK-LEVEL PANEL DATA IN ASIA
Global Banking, Financial Markets and Crises, pp 91-113
01 Jan 2013
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
This chapter examines how foreign banks respond to domestic monetary policy in host countries during crisis periods, in particular, the response shown toward the Asian financial crisis of 1997-1999 and the global financial crisis of 2008-2009. By observing 283 domestic and foreign banks in seven emerging Asian economies, we find that foreign banks are slower than domestic banks in adjusting the growth of their loans to changes in host monetary policy. This inertia by foreign banks is found to be more pronounced in the recent 2008-2009 global crisis than in the 1997-1999 Asian regional crisis, suggesting that the buffering/hampering effects of foreign banks on the effectiveness of the domestic monetary policy transmission mechanism become stronger in a recent global crisis originating from outside Asia than a regional crisis imploded within Asia a decade earlier. We also find that foreign banks' lower sensitivity than domestic banks to host monetary policy during the crisis periods is heterogeneous, depending on factors such as the extent of the adverse impact of crises on parent banks, the scope of business operation by parent banks, and foreign banks' mode of entry into host banking markets.
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Details
- Title
- FOREIGN BANKS, MONETARY POLICY, AND CRISES: EVIDENCE FROM BANK-LEVEL PANEL DATA IN ASIA
- Creators
- Bang Nam Jeon - Drexel UniversityJi Wu - Southwestern University
- Contributors
- B N Jeon (Editor)M P Olivero (Editor)
- Publication Details
- Global Banking, Financial Markets and Crises, pp 91-113
- Series
- International Finance Review
- Publisher
- Emerald Group Publishing; BINGLEY
- Number of pages
- 23
- Resource Type
- Book chapter
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:000358352700005
- Scopus ID
- 2-s2.0-84887911402
- Other Identifier
- 991019330810604721
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Business, Finance
- Economics