Foreign bank lending during COVID-19

Akgündüz Y. E., Cılasun S. M., Dursun-de Neef H. Ö., Hacıhasanoğlu Y. S., Yarba I.

Journal of Banking and Finance, vol.178, 2025 (SSCI) identifier

  • Publication Type: Article / Article
  • Volume: 178
  • Publication Date: 2025
  • Doi Number: 10.1016/j.jbankfin.2025.107488
  • Journal Name: Journal of Banking and Finance
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, International Bibliography of Social Sciences, Periodicals Index Online, ABI/INFORM, Business Source Elite, Business Source Premier, EconLit, Public Affairs Index, DIALNET
  • Keywords: Bank loan supply, COVID-19 pandemic, Foreign banks, International transmission of shocks
  • TED University Affiliated: Yes

Abstract

We study whether foreign banks’ exposure to the pandemic in their home countries affected their lending in Türkiye. Although foreign banks issued more loans than domestic banks, the ones with higher exposure to the pandemic decreased their lending significantly: 1 percentage point higher number of deaths per thousand people in their home countries led to an almost 0.5 percent reduction in lending. This reduction was alleviated by the fiscal support provided in their home countries. Our results support an international spillover of the pandemic shock and the implemented fiscal policies via banks.