نفوذ بانک های خارجی و کانال وام دهی در اقتصادهای نوظهور: شواهدی از داده های تلفیقی سطح بانکی

This paper examines the main implications of recently increasing foreign bank penetration on bank lending as a channel of monetary policy transmission in emerging economies. Using a dynamic panel model of loan growth, we investigate the loan granting behavior of 1273 banks in the emerging economies of Asia, Latin America, and Central and Eastern Europe during the period from 1996 to 2003. Applying the pooled OLS, system GMM, and panel VAR estimators, we find consistent evidence that foreign banks are less responsive to monetary shocks in host countries, as they adjust their outstanding loan portfolios and interest rates to a lesser extent than domestic private banks, independent of their liquidity, capitalization, size, efficiency, and credit risk, and although there exists a bank lending channel in the emerging economies, it is declining in strength due to the increased level of foreign bank penetration. We also explore possible driving factors for the different responses of foreign and domestic banks to monetary policy shocks by investigating foreign banks’ different behavior during banking crises and tranquil periods, the effects of mode of entry to host countries, the home-country effects, and the response of foreign banks from OECD countries vs. all foreign countries including non-OECD countries. We suggest the access of foreign banks to funding from parent banks through internal capital markets as the most convincing explanation.

Foreign banks’ presence in emerging economies has been rising significantly since early 1990s. As of end-2007, for a number of emerging economies, foreign ownership of the banking system is greater than 75 percent of system assets. For example, the share of foreign bank assets in the banking sector total assets has reached 80 percent in Mexico and has exceeded more than the 90 percent level in several Central and Eastern European countries, such as Estonia, Romania, and the Czech Republic. (See BIS, 2009, p.85) Whether the presence of foreign banks in these economies alters the transmission or effectiveness of monetary policy has become a pressing question for emerging market policy makers. The bank lending channel of monetary policy transmission assumes that bank deposits and other sources of bank finance are imperfect substitutes and, when the central bank tightens the money supply, banks cannot fully substitute reduced deposits with other funding sources. Thus, they have to contract lending, and this in turn reduces firms’ investment and output by limiting credit availability. To verify the existence of the bank lending channel, one has to show that banks that have different characteristics but face similar credit demand respond differently to monetary policy shocks, due to banks’ different ability to shield their loan granting activities. We use banks’ ownership, domestic privately-owned versus foreign-owned, to test for the existence of a bank lending channel by using data for more than 1200 banks in the emerging markets of Central and Eastern Europe, Latin America and Asia, over the period from 1996 to 2003. We use the pooled ordinary least squares (POLS) estimator and the system generalized method of moments (system GMM) estimator, as well as the panel vector autoregression (panel VAR) model that allows us to examine the dynamic pattern of domestic and foreign banks’ different responses to monetary policy shocks. We find evidence that foreign banks show a smaller sensitivity to domestic monetary policy shocks than their domestic peers. When central banks tighten the monetary policy, the effects are less pronounced for foreign banks in the sense that they contract their loan portfolio and raise their loan interest rates by less. Thus, our findings provide evidence for the existence of the bank lending channel, but also suggest that monetary policy in host countries could become less effective as the level of foreign bank penetration increases. We then explore possible explanations for this fact, and find that even after controlling for individual bank characteristics (liquidity, capitalization, size, and efficiency), credit risk, and credit demand effects, foreign banks are still less sensitive to changes in monetary policy than domestic counterparts. We believe that these findings are consistent with the existence of internal capital markets for global banks, that is, foreign subsidiaries have access to funds from their parent companies that shield them from adverse host country monetary shocks. This conjecture is reinforced by 1) comparing the behavior of domestic and foreign banks during banking crisis periods versus tranquil periods; 2) examining the impact of foreign banks’ mode of entry (takeover versus greenfield) to host countries; and 3) estimating the effects of changes in monetary policy and banking conditions in foreign banks’ home countries on their lending in the host country. Our analysis of dynamic effects provides additional evidence on the different responses of domestic and foreign banks to changes in monetary policy and banking conditions over time. The rest of the paper is organized as follows. Section 2 reviews the existing work on the effect of foreign bank penetration on bank credit stability. Section 3 describes our dataset and provides descriptive statistics. Section 4 presents the econometric methodology and discusses the empirical results. We conclude in Section 5 and discuss directions for future research.

Although foreign bank penetration in emerging economies has increased drastically in recent years, there has not been much research that explores the impact of the foreign bank presence on the bank lending channel as a monetary policy transmission mechanism in those emerging economies. This paper presents consistent evidence that there are distinctively differential patterns of monetary policy transmission in emerging markets with specific focus on the bank lending channel, in particular, between domestic privately-owned and foreign-owned banks. By examining more than 1200 banks in 35 emerging economies from Central and Eastern Europe, Latin America and Asia, our findings suggest that domestic and foreign banks respond differently to changes in monetary policy, confirming the existence of a bank lending channel by using ownership types. We find evidence that foreign banks are less sensitive to contractionary monetary policy shocks in host countries, as they reduce their loans and raise the loan interest rate by less than domestic private banks. Accordingly, the recent increasing foreign bank penetration in emerging markets implies that the bank lending channel as the monetary transmission mechanism has declined in strength. The lower sensitivity of foreign banks is driven by factors independent of bank liquidity, capitalization, size, efficiency, credit riskiness and the effects from demand side. In addition, foreign banks contract their loans by less than domestic banks during the banking crises periods. Takeover foreign banks are found to be even less sensitive to host country’s monetary policy than greenfield foreign banks. Some of the macroeconomic and banking conditions in home countries, such as bank deposit growth, affect the lending of foreign banks in host countries. We believe all these findings point to the existence of internal capital markets inside global banks, through which parent banks allocate funds to their foreign subsidiaries. Our findings imply a role of stabilization that the foreign bank presence may play in host countries during banking crisis periods, and at the same time recognize the possibility that some changes in home countries may be transmitted to host countries via foreign banks’ adjustment of lending. Our findings also suggest a potential trade-off between more foreign capital inflows into the financial markets of emerging economies and a loss of effectiveness in the monetary policy of the recipient country. The consistent evidence presented in this paper that the presence of foreign banks decreases the effectiveness of monetary policy in the home country seems to have important policy implications on the channels of contagion of the 2007–08 global financial crises. The role played by foreign banks in this respect may warrant enhanced transparency requirements and the imposition of more effective surveillances and regulations on foreign banks’ use of internal capital markets in the emerging economies. Our paper provides support to both proponents and opponents of foreign bank entry for several reasons. On one hand, foreign banks could play a stabilizing role during banking crises, as suggested by the finding that they adjust their lending volume and interest rates by less than domestic banks during banking crisis periods. On the other hand, we find, by examining the effects of foreign banks’ home conditions on host countries, that lending by foreign banks is affected by changes in the deposit base in their home countries. This finding lends support to those who argue that monetary policy or banking shocks originated abroad can be transmitted into host countries through foreign banks, and suggests that foreign banks could further destabilize host countries during global financial and economic crises. We leave for future research the identification of specific channels of financial contagion through banking, including internal capital markets, and a thorough analysis of growth and welfare implications of foreign bank penetration on their host countries.