DP5164 German Bank Lending During Financial Crises: A Bank Level Analysis

Author(s): Frank Heid, Thorsten Nestmann, Natalja Von Westernhagen, Beatrice Weder di Mauro
Publication Date: August 2005
Keyword(s): bank lending, banking, contagion, currency crises, emerging markets crises, financial stability
JEL(s): F30, F32, F34
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=5164

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.