Domestic Credit Supply Response to International Bank Deleveraging : Is Asia Different?.

By: Aiyar, ShekharContributor(s): Jain-Chandra, SonaliMaterial type: TextTextSeries: IMF Working PapersPublisher: Washington : International Monetary Fund, 2012Copyright date: ©2012Description: 1 online resource (16 pages)Content type: text Media type: computer Carrier type: online resourceISBN: 9781475562347Subject(s): Banks and banking -- Asia | Banks and banking, International -- AsiaGenre/Form: Electronic books.Additional physical formats: Print version:: Domestic Credit Supply Response to International Bank Deleveraging : Is Asia Different?DDC classification: 332.152 LOC classification: HG3968. -- A39 2012ebOnline resources: Click to View
Contents:
Cover -- Contents -- I. Introduction -- II. The Role of European Banks in Asia -- III. Econometric Methodology -- IV. Results -- V. Why did Asia React Differently? -- References -- Figures -- 1. Consolidated Foreign Claims on Asian Economies -- 2. Consolidated Foreign Claims of European Banks on Asia -- 3. BIS Reporting Banks' Foreign Claims on Selected Asian Economies by Sector -- 4. Consolidated International Claims of European Banks -- 5. Difference in Policy Responses: Asia Versus Non-Asia -- 6. Debt-to-Equity Ratio in Financial Firms at End-2007 -- Tables -- 1. Impact of Change in Foreign Claims on Change in Domestic Credit Supply -- 2. Impact of Change in Foreign Claims on Change in Domestic Credit Supply (Using exchange rate adjusted foreign claims data) -- 3. Summary of Policy Actions taken in Asia during the Global Financial Crisis.
Summary: During the global financial crisis, European banks contracted foreign claims on recipient economies sharply. This paper examines the impact of that deleveraging on credit supply in recipient economies, with a particular focus on Asia. Identification is achieved by exploiting heterogeneity in ex-ante patterns of funding reliance on different European banking systems, and in variation in the ratio of local claims in local currency to total foreign claims in recipient economies. These sources of variation are used to create instruments for the deleveraging shock. We find that the contraction in European bank foreign claims was associated with a substantial reduction in domestic credit supply in a broad sample of countries. However, the credit supply response in Asia was only about half the size of the response in non-Asian countries, possibly due to a more robust policy response and healthier local bank balance sheets at the outset of the crisis.
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Cover -- Contents -- I. Introduction -- II. The Role of European Banks in Asia -- III. Econometric Methodology -- IV. Results -- V. Why did Asia React Differently? -- References -- Figures -- 1. Consolidated Foreign Claims on Asian Economies -- 2. Consolidated Foreign Claims of European Banks on Asia -- 3. BIS Reporting Banks' Foreign Claims on Selected Asian Economies by Sector -- 4. Consolidated International Claims of European Banks -- 5. Difference in Policy Responses: Asia Versus Non-Asia -- 6. Debt-to-Equity Ratio in Financial Firms at End-2007 -- Tables -- 1. Impact of Change in Foreign Claims on Change in Domestic Credit Supply -- 2. Impact of Change in Foreign Claims on Change in Domestic Credit Supply (Using exchange rate adjusted foreign claims data) -- 3. Summary of Policy Actions taken in Asia during the Global Financial Crisis.

During the global financial crisis, European banks contracted foreign claims on recipient economies sharply. This paper examines the impact of that deleveraging on credit supply in recipient economies, with a particular focus on Asia. Identification is achieved by exploiting heterogeneity in ex-ante patterns of funding reliance on different European banking systems, and in variation in the ratio of local claims in local currency to total foreign claims in recipient economies. These sources of variation are used to create instruments for the deleveraging shock. We find that the contraction in European bank foreign claims was associated with a substantial reduction in domestic credit supply in a broad sample of countries. However, the credit supply response in Asia was only about half the size of the response in non-Asian countries, possibly due to a more robust policy response and healthier local bank balance sheets at the outset of the crisis.

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Electronic reproduction. Ann Arbor, Michigan : ProQuest Ebook Central, 2018. Available via World Wide Web. Access may be limited to ProQuest Ebook Central affiliated libraries.

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