1.11.2011
Tuesday
at 10.30
Zuzana Fungáčová (BOFIT), Risto Herrala (BOFIT) and Laurent Weill (Université de Strasbourg and BOFIT):
Bank ownership and credit supply during the financial crisis: evidence from Russia
Abstract
The aim of this study is to examine how bank ownership influences credit supply during the financial crisis. This issue is crucial for understanding the implications of foreign and state ownership of banks as former literature suggests that banks can have a different lending behavior in troubled times depending on their ownership. We investigate this issue for Russia, where banking sector consists of state-controlled banks, foreign-owned banks and domestic private banks. Employing an exhaustive dataset on Russian banks, we analyze the evolution of credit supply during the recent financial crisis. We develop an original approach to estimate credit supply, which is based on stochastic frontier analysis. We find evidence that bank ownership has exerted an impact on credit supply during the financial crisis. While the crisis caused an overall decrease in credit supply, this reduction was greater for foreign banks and lower for state-controlled banks relative to domestic private banks. Thus, we find support for the hypothesis of “lack of loyalty” of foreign banks and for the view that the objective function of state-controlled banks leads them to support the economy during economic downturns.
BOFIT seminars
The seminars are open to all economists interested in the subject areas covered.
You need to pre-register for the seminar with
Ms Noora Soikko (firstname.lastname@bof.fi, phone + 358 10 831 2268).
Seminar will be held at Rauhankatu 19, 3rd floor seminar room (arrive at the Bank's Rauhankatu 19 entrance, from where you will be escorted to the BOFIT seminar room).