Learning from Financial Crises

This paper considers the question of whether international banks learn from their previous crisis experiences and reduce their lending to developing countries in the event of a financial crisis. The analysis combines a bank-level dataset of bank activity and ownership with country-level data on the stock of historical crisis events between 1800 and 2005. To circumvent selection and endogeneity concerns, the paper exploits temporal variations in the relative recency of crises as instruments for crisis experience. The results indicate that foreign banks with greater crisis experience reduced their lending significantly more relative to other foreign banks, which can be interpreted as evidence in favor of a learning effect. The findings survive robustness checks that include alternative measures of crisis experience, additional controls, and decompositions into different types of crises. The question of learning is also examined from the perspective of other measures of bank performance.

Bibliographic Details

Main Authors:	Lim, Jamus Jerome, Minne, Geoffrey
Format:	Policy Research Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2014-04
Subjects:	ACCESS TO CREDIT, ACCESS TO FINANCE, ADVANCED ECONOMIES, AMOUNT OF LOANS, ASSET BASE, ASSET RATIO, ASSET RATIOS, ASSET VALUES, ASSETS RATIO, BAILOUT, BALANCE SHEET, BALANCE SHEETS, BANK ACTIVITY, BANK ASSETS, BANK BALANCE SHEETS, BANK CREDIT, BANK DEPOSITS, BANK HOLDING, BANK HOLDING COMPANIES, BANK HOLDING COMPANY, BANK LOAN, BANK LOANS, BANK PERFORMANCE, BANK PROFITABILITY, BANK RESTRUCTURING, BANKING CRISES, BANKING CRISIS, BANKING INSTITUTION, BANKING INSTITUTIONS, BANKING SECTOR, BANKING SECTOR DEVELOPMENT, BANKING SECTOR REFORM, BANKING SECTORS, BANKING SUPERVISION, BANKING SYSTEM, BIASES, BUSINESS CYCLE, CAPITAL MARKETS, CAPITAL REQUIREMENTS, CHECKS, CLAIM, COLLATERAL, CONTAGION, COOPERATIVE BANKS, COST OF CREDIT, CREDIBILITY, CREDIT EXTENSION, CREDIT LINES, CREDIT POLICIES, CREDIT PROVISION, CREDIT QUALITY, CREDIT RISK, CREDITORS, CREDITS, CRISIS LENDING, CURRENCY, CURRENCY CRISES, CURRENT ACCOUNT, CURRENT ACCOUNT BALANCE, DEBT, DEBT CRISES, DEBT CRISIS, DEBT DEFAULT, DEBT OBLIGATIONS, DEFAULT PROBABILITIES, DEFAULT RISK, DEPENDENT, DEPOSIT, DEPOSITS, DEVELOPING COUNTRIES, DIRECT OWNERSHIP, DOMESTIC BANKING, DOMESTIC BANKS, DOMESTIC CREDITORS, DOMESTIC DEBT, DOMESTIC MARKETS, ECONOMIC ACTIVITY, ECONOMIC CONDITIONS, EMERGING ECONOMIES, EMERGING MARKET, EMERGING MARKETS, EMPIRICAL ANALYSIS, EQUITIES, EUROPEAN CENTRAL BANK, EXCLUSION, EXTERNAL DEBT, FAMILIES, FEDERAL RESERVE, FINANCIAL ASSETS, FINANCIAL CRISES, FINANCIAL CRISIS, FINANCIAL DEVELOPMENT, FINANCIAL DISRUPTION, FINANCIAL INSTITUTIONS, FINANCIAL MARKETS, FINANCIAL REFORM, FINANCIAL REFORMS, FINANCIAL SECTOR POLICY, FINANCIAL SERVICES, FINANCIAL STABILITY, FINANCIAL SUPPORT, FOREIGN BANK, FOREIGN BANKS, FOREIGN CURRENCY, FOREIGN CURRENCY DEPOSITS, FOREIGN OWNERSHIP, GUIDELINES, HOME BANKING, HOST COUNTRIES, HOST COUNTRY, HOST ECONOMIES, HOST ECONOMY, HOUSEHOLDS, ID, IMPORTANCE OF LIQUIDITY, INCOME STATEMENT, INCUMBENT BANKS, INFLATION, INFORMATION ASYMMETRY, INFORMATION SYSTEMS, INFORMATIONAL ASYMMETRIES, INFORMATIONAL ASYMMETRY, INSTITUTIONAL REFORM, INSTRUMENT, INSURANCE, INTEREST MARGIN, INTERNATIONAL BANK, INTERNATIONAL BANK LENDING, INTERNATIONAL BANKS, INTERNATIONAL FINANCE, ISSUANCE, JUDGMENT, JURISDICTION, LEARNING OPPORTUNITIES, LENDING CONDITIONS, LENDING DECISIONS, LIQUIDITY CONSTRAINT, LOAN, LOAN LOSS, LOAN LOSS PROVISIONS, LOAN OFFICER, LOAN PORTFOLIO, LOAN PORTFOLIOS, LOAN VOLUMES, LOCAL CURRENCY, LOCAL MARKETS, MACROECONOMIC CONTROLS, MACROECONOMIC ENVIRONMENT, MACROECONOMIC ENVIRONMENTS, MACROECONOMIC POLICY, MACROECONOMIC VARIABLE, MACROECONOMICS, MARKET SHARE, MONETARY AUTHORITIES, MONETARY POLICY, MONETARY SHOCKS, NET ASSETS, NET INTEREST MARGIN, NET WORTH, NONPERFORMING LOANS, OPEN ECONOMIES, OPERATING COSTS, OUTSTANDING LOAN, OVERHEAD COSTS, OWNERSHIP DATA, OWNERSHIP INFORMATION, PARENT COMPANIES, POTENTIAL BORROWERS, PRIMARY MARKETS, PRIVATE CREDIT, PROFITABILITY, PROFITABILITY MEASURES, PRUDENTIAL REGULATION, RECESSIONS, REFORM MEASURE, REPATRIATION, REPUDIATION, RESERVES, RETURN, RETURN ON ASSETS, RETURN ON EQUITY, RETURNS, RISK EXPOSURE, RISK MANAGEMENT, RISK OF DEFAULT, SECURITIES, SHARE OF ASSETS, SOLVENCY, SOVEREIGN DEBT, STOCK MARKET, SUBSIDIARIES, TAX, TRADE FLOWS, TRANSMISSION MECHANISM, VALUATION, VALUATIONS, WHOLESALE FUNDING,
Online Access:	http://documents.worldbank.org/curated/en/2014/04/19365015/learning-financial-crises http://hdl.handle.net/10986/18332
Tags:	Add Tag No Tags, Be the first to tag this record!