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Determinants of loans and deposits strategies of foreign bank subsidiaries in emerging countries

Emerging Markets Journal

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Title Determinants of loans and deposits strategies of foreign bank subsidiaries in emerging countries
 
Creator Mili, Mehdi
Sahut, Jean-Michel
 
Subject —
 
Description Abstract. This paper focuses on the transmission of bank liquidity shocks in Loan and deposit in emerging markets. First, we attempt to identify factors affecting the credit strategy of foreign banks in emerging countries. Second, we test whether depositors exert market discipline on foreign subsidiaries. By combining financial variables of subsidiaries and their parent banks and macroeconomic variables of host and home countries, we investigate the factors that may affect the behavior of depositors. Our empirical approach is based on a Partial Least Squares-Path model that allows us to indentify the causal relationships between the various groups of variables. Our results show that foreign bank lending is determined by the specific financial variables of the parent bank and macroeconomic variables of the country of origin. This support that the strategy's credit of foreign subsidiary is centrally managed at the parent bank and credit supply of subsidiaries depends primary on the financial situation of its parent bank. Finally we find evidence of market discipline exercised over foreign subsidiaries in emerging countries. We show that market discipline is strongly affected by the specific characteristics of the subsidiary.
 
Publisher University Library System, University of Pittsburgh
 
Contributor —
 
Date 2013-09-17
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://emaj.pitt.edu/ojs/index.php/emaj/article/view/42
10.5195/emaj.2013.42
 
Source EMAJ: Emerging Markets Journal; Vol 3, No 2 (2013); 29-45
2158-8708
 
Language en
 
Relation http://emaj.pitt.edu/ojs/index.php/emaj/article/view/42/165