Foreign Banks in Emerging Market Crises: Evidence From Malaysia

July 1, 2004

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Enrica Detragiache, and Poonam Gupta. Foreign Banks in Emerging Market Crises: Evidence From Malaysia, (USA: International Monetary Fund, 2004) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Foreign banks have greatly increased their presence in emerging market countries in recent years. This paper compares the performance of domestic banks and a long-established group of foreign banks during the recent crisis in Malaysia. We find that the sharpest differences are between banks mainly active in Asia (including all domestic and some foreign banks) and foreign banks not specialized in Asia. The latter group performed better than the rest during the crisis, maintaining higher profitability thanks to higher interest margins and lower nonperforming loans. Foreign banks did not abandon the local market during the crisis and received less government support than domestic institutions.

Subject: Banking, Banking crises, Commercial banks, Financial crises, Financial institutions, Foreign banks, Loans, Nonperforming loans

Keywords: Asia and Pacific, Asia-oriented, Bank, Bank assets, Bank Bumiputra, Bank characteristic, Bank closure, Bank dummy, Bank Negara Malaysia, Bank performance, Bank rescue, Banking crises, Commercial banks, Crisis, Emerging market banks, Foreign banks, Loans, Nonperforming loans, Parent bank, WP

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2004/129
Stock No:

WPIEA1292004
ISBN:

9781451855142
ISSN:

1018-5941

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