“Lending by example”

Direct and indirect effects of foreign bank presence in emerging markets

M. Giannetti, S. Ongena

Research output: Contribution to journalArticleScientificpeer-review

Abstract

Using a novel dataset that allows us to trace the bank relationships of a sample of mostly unlisted firms, we explore which borrowers are able to benefit from foreign bank presence in emerging markets. Our results suggest that the limits to financial integration are less tight than the static picture of firm-bank relationships implies. Even though foreign banks are more likely to engage large and foreign-owned firms, after an acquisition, a bank is 20% less likely to terminate a relationship with a firm if the acquirer is foreign rather than domestic. Most importantly, within a credit market, firms appear to have the same access to financial loans and ability to invest whether they borrow from a foreign bank or not, while foreign banks benefit all firms by indirectly enhancing credit access.
Original languageEnglish
Pages (from-to)167-180
JournalJournal of International Economics
Volume86
Issue number1
DOIs
Publication statusPublished - 2012

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Emerging markets
Direct effect
Foreign banks
Lending
Indirect effects
Loans
Credit markets
Bank relationships
Financial integration
Access to credit
Bank-firm relationships

Cite this

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“Lending by example” : Direct and indirect effects of foreign bank presence in emerging markets. / Giannetti, M.; Ongena, S.

In: Journal of International Economics, Vol. 86, No. 1, 2012, p. 167-180.

Research output: Contribution to journalArticleScientificpeer-review

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