that high-risk firms and firms with fewer tangible assets were more affected by this capital crunch.

While these findings indicate that multinational banks transmitted the crisis from their home to their host countries, Navaretti et al. (2010) find that such banks rather had a stabilizing effect on bank lending during the crisis. They use data from the Bank for International Settlements (BIS) for their aggregate analyses and balance sheet information from Bankscope for their micro-level analyses. On an aggregate level they find that, during the crisis, the share of local assets financed by cross-border funding increases in foreign affiliates. On the micro level, they find that foreign affiliates reduced the ratio of customer loans to customer deposits less during the crisis than domestic banks. They interpret their results as evidence for the wellfunctioning of the internal capital markets of multinational banking groups which supported local assets by cross-border funds.

Berglöf et al. (2009) point out that it is surprising that there were no systemic currency and banking crises observed in emerging Europe despite the high vulnerability of many countries (increased private sector indebtedness, currency mismatches) and the severity with which the crisis hit the region after the Lehman failure. In a country-level analysis using data from the BIS they find that foreign bank ownership mitigated bank lending outflows in the last quarter of 2008 and the first quarter of 2009.<sup>13</sup> Furthermore, they hint at the impact of the political and economic integration with Western Europe without explicitly testing it.

De Haas et al. (2011) use Bankscope data to assess the stability of bank lending in the transition region during the crisis years 2008-2009. Their results show that foreign bank subsidiaries decreased their lending earlier and faster than domestic banks whereas state-owned banks seemed to have been a relatively stable source of credit. They also analyze the impact of home-country government support for the parent banks on their lending activities in emerging Europe because this support might have come with requirements to focus on lending in their home markets. However, they do not find any impact of these support packages on lending of foreign bank subsidiaries in emerging Europe.

Finally, they study the impact of the so-called Vienna Initiative (VI), a coordination platform for multinational banks, International Financial Institutions, European Institutions as well as home and host country regulatory and fiscal authorities. During this process, multinational banks signed commitments to keep their subsidiaries capitalized in five countries. While this decreased fears of foreign bank withdrawal from these countries, it was not clear whether banks would not instead withdraw funds from other countries to keep up their exposure in the VI countries. They find that lending of foreign banks participating in the VI was somewhat more stable than lending of non-VI foreign banks. Moreover, their results do not hint at negative spillover effects since they do not find VI banks to withdraw from non-VI countries.<sup>14</sup>

> 13 Mihaljek (2009) finds similar results also using country-level data from the BIS.

> 14 Cetorelli and Goldberg (2011) show in a country-level study that in VI countries the contraction in domestic bank lending was attenuated.

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