Foreign banks reduce lending by up to 42% during financial crises.
Foreign banks reduce lending during financial crises, especially if they are from countries experiencing crises themselves. A study found that banks owned by foreign entities that faced crises in their home countries during 2007-08 decreased lending by 13% to 42% compared to banks from non-crisis countries. This trend was also observed, to a lesser extent, during the 1997/98 Asian crisis.