Running For The Exit: International Banks And Crisis Transmission

The global financial crisis has reignited the debate about the risks of financial globalization, in particular the international transmission of financial shocks. The authors use data on individual loans by the largest international banks to their various countries of operations to examine whether banks' access to borrower information affected the transmission of the financial shock across borders. The simultaneous use of country and bank-fixed effects allows one to disentangle credit supply and demand and to control for general bank characteristics. They find that during the crisis banks continued to lend more to countries that are geographically close, where they are integrated into a network of domestic co-lenders, and where they had gained experience by building relationships with (repeat) borrowers.

Provided by: European Bank for Reconstruction and Development Topic: Big Data Date Added: Feb 2011 Format: PDF

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