The Great Cross-Border Bank Deleveraging Supply Constraints and Intra-Group Frictions |
|
Author:
| Cerutti, Eugenio Claessens, Stijn |
Series title: | IMF Working Papers |
ISBN: | 978-1-4983-5478-3 |
Publication Date: | Sep 2014 |
Publisher: | International Monetary Fund
|
Book Format: | Paperback |
List Price: | USD $20.00 |
Book Description:
|
International banks greatly reduced their direct cross-border and local affiliates' lending as the global financial crisis strained balance sheets, lowered borrower demand, and changed government policies. Using bilateral, lender-borrower countrydata and controlling for credit demand, we show that reductions largely varied in line with markets' prior assessments of banks' vulnerabilities, with banks' financial statement variables and lender-borrower country characteristics playing...
More DescriptionInternational banks greatly reduced their direct cross-border and local affiliates' lending as the global financial crisis strained balance sheets, lowered borrower demand, and changed government policies. Using bilateral, lender-borrower countrydata and controlling for credit demand, we show that reductions largely varied in line with markets' prior assessments of banks' vulnerabilities, with banks' financial statement variables and lender-borrower country characteristics playing minor roles. We find evidence that moving resources within banking groups became more restricted as drivers of reductions in direct cross-border loans differ from those for local affiliates' lending, especially for impaired banking systems. Home bias induced by government interventions, however, affected both equally.