Title Are foreign banks a 'safe haven'? : evidence from past banking crises / prepared by Gustavo Adler and Eugenio Cerutti

Published [Washington, D.C.] : International Monetary Fund, ©2015

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Description 1 online resource (27 pages) : color illustrations Series IMF working paper, 1018-5941 ; WP/15/43 IMF working paper ; WP/15/43. Contents Cover Page; Title Page; Copyright Page; Contents; Figures; Tables; I. Introduction; II. Background; A. Argentina's Banking System; Table 1. Argentina: Structure of the Banking System, November 1994 and November 2001.; Figure 1. Argentina: Deposit Evolution During Bank Runs; B. Uruguay's Banking System; Table 2. Uruguay: Structure of the Banking System; Figure 2. Deposit Evolution During 2002 Bank Run in Uruguay; III. Econometric Exercise; A. Methodology; B. Regression Results; Table 3. Argentina: Resident Depositors' Reaction During Bank Runs Table 4. Uruguay: Resident Depositors' Reaction During 2002 Bank RunIV. Conclusions; References; Appendix 1; Appendix 1 -- Figure A; Appendix 1 -- Figure B; Appendix 1-Table A. Argentina. Data description; Appendix 1-Table B. Uruguay. Data description; Appendix 1 -- Table C -- Summary Statistics; Appendix 1 -- Table D -- Summary Statistics; Appendix 2 -- Argentina -- Chronology of main events; Appendix 3. Uruguay -- Chronology of main events during the 2002 crisis; Footnotes Summary The presence of foreign banks in emerging markets has increased markedly over the last two decades, raising questions about their potentially stabilizing or destabilizing role during times of financial distress. Most studies on this subject have focused on banks' asset side (i.e., their lending behavior). This paper focuses on their liability side, studying the behavior of depositors vis-à-vis foreign banks. We rely on data from the banking crises in Argentina and Uruguay over the period 1994-2002 to conduct the study. The paper focuses on three questions; (i) are foreign banks perceived as a safe haven during bank runs?; (ii) does their legal structure (branch versus subsidiary) matter?; (iii) do perceptions depend on the nature of the crisis? Contrary to the commonly held view that foreign banks play a stabilizing role during domestic banking crises, we do not find robust evidence in this regard. Only in one (large) bank run episode, out of five studied, there is evidence of safe haven perceptions towards foreign branches.--Abstract Notes "February 2015." "Research Department." Bibliography Includes bibliographical references (page 15) Notes English Online resource; title from pdf title page (IMF.org Web site, viewed March 3, 2015) Subject Banks and banking, Foreign -- Argentina Financial crises -- Argentina Bank deposits -- Argentina Banks and banking -- Argentina Banks and banking, Foreign -- Uruguay Financial crises -- Uruguay Bank deposits -- Uruguay Banks and banking -- Uruguay Bank deposits Banks and banking Banks and banking, Foreign Financial crises Argentina Uruguay Form Electronic book Author Cerutti, Eugenio, author. International Monetary Fund. Research Department. ISBN 9781498380577 1498380573 1616357045 9781616357047

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