Foreign Bank Lending: The Role of Home Country Culture During Prosperous and Crisis Periods

Do foreign banks in India respond to global monetary policy shocks? A SVAR analysis

Studies in Economics and Finance ◽

10.1108/sef-10-2019-0417 ◽

2020 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Ameen Omar Shareef ◽

K.P. Prabheesh

Keyword(s):

Monetary Policy ◽

Bank Lending ◽

Foreign Bank ◽

Foreign Banks ◽

Monetary Policy Shocks ◽

Content Type ◽

Indian Economy ◽

Policy Shocks ◽

The Impact

Purpose This paper aims to examine the role of foreign banks in transmitting global monetary policy shocks to India. Further, the authors try to explore the international bank lending channel and analyze the impact of global monetary policy on Indian macroeconomic variables. Design/methodology/approach The authors use a structural break unit root test and structural vector autoregression on monthly data from 1998 to 2018. Findings The study finds that the global monetary policy is significantly determining foreign banks’ lending in India; the evidence of a portfolio re-balancing channel in the process of global monetary policy transmission to the Indian economy; the exchange rate is significantly explaining the foreign bank credit dynamism in India; and evidence of international monetary policy spillover to the Indian economy. Originality/value This is the first attempt to analyze the role of foreign banks in the transmission of global monetary policy shocks to India, where the literature availability is limited. The finding of ineffective domestic monetary policy on foreign bank lending opens the need for an in-depth and diversified analysis of the role of foreign banks in the transmission of domestic monetary policy.

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Revisiting the Multinationality -- Firm Performance Relationship: The role of home-country culture

Academy of Management Proceedings ◽

10.5465/ambpp.2021.11875abstract ◽

2021 ◽

Vol 2021 (1) ◽

pp. 11875

Author(s):

Rakesh B. Sambharya ◽

Farok Contractor

Keyword(s):

Firm Performance ◽

Home Country ◽

Country Culture

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Monetary Policy Spillovers Under Covid-19: Evidence from U.S. Foreign Bank Subsidiaries

10.24148/wp2021-14 ◽

2021 ◽

pp. 1.000-30.000

Author(s):

Mark M. Spiegel ◽

Keyword(s):

Monetary Policy ◽

Home Country ◽

Bank Lending ◽

The United States ◽

Foreign Bank ◽

Percentage Point Increase ◽

Capital Ratios ◽

Bank Balance Sheets ◽

The Impact ◽

Monetary Policy Spillovers

This paper uses Call Report data to examine the impact of home country monetary policy on foreign bank subsidiary lending in the United States during the COVID-19 pandemic. Examining a large sample of foreign bank subsidiaries and domestic U.S. banks, we find that foreign bank lending growth was positively associated with both lower home country policy rates and negative home country rates. Our point estimates indicate that a one standard deviation decrease in home country policy rates was associated with a 3.5 percentage point increase in lending growth while negative home country policy rates added an additional 3.0 percentage points on average. Disparities in sensitivity to home country rates also exist by bank size, as large banks exhibited more responsiveness to home country policy rate levels, but were less responsive to negative policy rates. Easier home country policy rates are also found to impact negatively in growth in capital ratios and bank income, in keeping with expanded foreign subsidiary activity. However, income responses to negative home country rates are mixed, in a manner suggestive of sophisticated adjustment of global bank balance sheets to changes in relative home and host country monetary policy stances. Overall, our findings confirm that the bank lending channel for global monetary policy spillovers was active during the pandemic crisis.

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THE ROLE OF PRODUCT ETHNICITY IN HOME COUNTRY BIAS

10.15444/gmc2014.01.04.03 ◽

2014 ◽

Author(s):

Peter Mathias Fischer ◽

◽

Katharina P. Zeugner-Roth ◽

Keyword(s):

Home Country

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The Role of Information from International Bank Lending in Mutual Fund Equity Investing

SSRN Electronic Journal ◽

10.2139/ssrn.3107644 ◽

2017 ◽

Author(s):

Linda Allen ◽

Suparna Chakraborty ◽

Sonali Hazarika ◽

Chih-Huei (Debby) Su

Keyword(s):

Mutual Fund ◽

Bank Lending ◽

International Bank ◽

Role Of Information

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Foreign Banks in the Crisis

10.1093/oso/9780198809968.003.0003 ◽

2017 ◽

Author(s):

Rachel A. Epstein

Keyword(s):

Financial Crisis ◽

Central Europe ◽

Bank Lending ◽

Foreign Ownership ◽

Foreign Bank ◽

Foreign Banks ◽

Market Model ◽

Unexpected Finding ◽

East Central Europe ◽

East Central

One reason governments have protected their banks from foreign ownership is that they feared foreign-owned banks would “cut and run”—i.e. abandon their host markets—in a financial crisis. An unexpected finding of this chapter, however, is that while foreign banks’ commitments to host markets have indeed been fleeting in crises, those commitments were weakest when the relationship between foreign banks and host markets was not characterized by ownership. Thus it was foreign ownership through a “second home market” model and bank subsidiaries during the acute phase of the US financial crisis (2008–9) that saved East Central Europe from economic catastrophe. In Western Europe, meanwhile, where foreign bank ownership levels were low but cross-border lending was significant, bank lending retreated behind national borders. This chapter also rejects the argument that the Vienna Initiative, a voluntary bank rollover agreement, compelled foreign-owned banks to maintain their exposures in East Central Europe.

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Welfare optimization and multinational monopolies

The Journal of the Australian Mathematical Society Series B Applied Mathematics ◽

10.1017/s0334270000000448 ◽

1996 ◽

Vol 38 (1) ◽

pp. 16-25

Author(s):

A. M. Russell ◽

C. A. Martini ◽

J. A. Rickard

Keyword(s):

Parameter Space ◽

Home Country ◽

Domestic Market ◽

Consumption Tax ◽

Optimal Value ◽

National Welfare ◽

Consumption Taxes

AbstractThis paper examines the role of import tariffs and consumption taxes when a product is supplied to a domestic market by a foreign monopoly via a subsidiary. It is assumed that there is no competition in the domestic market from internal suppliers. The home country is able to levy a profits tax on the subsidiary. The objective of our analysis is to determine the mix of tariff and consumption tax which simultaneously maximizes national welfare. We show that national welfare does not have an internal maximum, but attains its maximum on a boundary of the consumption tax–tariff parameter space. Furthermore, the optimal value of national welfare increases as the tariff decreases and the consumption tax increases. The results obtained generalize the results of an earlier paper in which national welfare was maximized with respect to either a tariff or consumption tax, but not both.

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Non-bank financial institutions and economic growth: Evidence from Africa’s three largest economies

South African Journal of Economic and Management Sciences ◽

10.4102/sajems.v20i1.1545 ◽

2017 ◽

Vol 20 (1) ◽

Cited By ~ 2

Author(s):

Ronald Rateiwa ◽

Meshach J. Aziakpono

Keyword(s):

Economic Growth ◽

South Africa ◽

Financial Institutions ◽

Time Series Data ◽

Bank Lending ◽

Series Data ◽

The Sustainable Development ◽

Long Run ◽

The Relationship

Background: In order for the post-2015 world development agenda – termed the sustainable development goals (SDGs) – to succeed, there is a pronounced need to ensure that available resources are used more effectively and additional financing is accessed from the private sector. Given that traditional bank lending has slowed down, the development of non-bank financing has become imperative. To this end, this article intends to empirically test the role of non-bank financial institutions (NBFIs) in stimulating economic growth.Aim: The aim of this article is to empirically test the existence of a long-run equilibrium relationship between economic growth and the development of NBFIs, and the causality thereof.Setting: The empirical assessment uses time-series data from Africa’s three largest economies, namely, Egypt, Nigeria and South Africa, over the period 1971–2013.Methods: This article uses the Johansen cointegration and vector error correction model within a country-specific setting.Results: The results showed that the long-run relationship between NBFI development and economic growth is relatively stronger in Egypt and South Africa, than in Nigeria. Evidence in respect of Nigeria shows that such a relationship is weak. The nature of the relationship between NBFI development and economic growth in Egypt is positive and significant, and predominantly bidirectional. This suggests that a virtuous relationship between NBFIs and economic growth exists in Egypt. In South Africa, the relationship is positive and significant and predominantly runs from NBFI development to economic growth, implying a supply-leading phenomenon. In Nigeria, the results are weak and mixed.Conclusion: The study concludes that in countries with more developed financial systems, the role of NBFIs and their importance to the economic growth process are more pronounced. Thus, there is need for developing policies targeted at developing the NBFI sector, given their potential to contribute to economic growth.

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