State-owned banks and international shock transmission

This study re-examines the relationship between commercial bank ownership and lending growth from 1996-2019. The results show that before the 2008 financial crisis, both categories of foreign banks expanded lending, predominantly in developing countries. A shift occurred in the lending behavior of foreign banks post -2008. Bank-specific characteristics became more influential in determining credit growth. During host country banking crises, foreign statecontrolled banks demonstrated higher loan growth rates than private-owned banks and reduced credit growth abroad during banking crises in home countries. Lastly, during the 2008 crisis, domestic state-controlled banks stabilized lending activity, while both types of foreign banks reduced lending.