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International banking amidst Covid-19: resilience and drivers

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  • Bryan Hardy
  • Elod Takáts

Abstract

The claims of international banks held up well during the Covid-19 crisis, although economic output fell by even more than during the Great Financial Crisis (GFC). Both cross-border and local claims were resilient, in advanced and emerging market economies alike. Looking at lending to the real economy, we examine how borrower and lender characteristics relate to the growth of claims on the private non-financial sector during the pandemic. We find that countries with stronger economic activity and smaller financial vulnerabilities borrowed more. Likewise, better capitalised banking systems lent more. The economic stress also led advanced economy borrowers to draw on pre-existing credit lines from foreign banks.

Suggested Citation

  • Bryan Hardy & Elod Takáts, 2020. "International banking amidst Covid-19: resilience and drivers," BIS Quarterly Review, Bank for International Settlements, December.
    • Handle: RePEc:bis:bisqtr:2012g
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    References listed on IDEAS

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    1. Ulf Lewrick & Christian Schmieder & Jhuvesh Sobrun & Elod Takats, 2020. "Releasing bank buffers to cushion the crisis - a quantitative assessment," BIS Bulletins 11, Bank for International Settlements.
    2. Mary Amiti & David E. Weinstein, 2018. "How Much Do Idiosyncratic Bank Shocks Affect Investment? Evidence from Matched Bank-Firm Loan Data," Journal of Political Economy, University of Chicago Press, vol. 126(2), pages 525-587.
    3. Iñaki Aldasoro & Claudio Borio & Mathias Drehmann, 2018. "Early warning indicators of banking crises: expanding the family," BIS Quarterly Review, Bank for International Settlements, March.
    4. Pablo Garcia Luna & Bryan Hardy, 2019. "Non-bank counterparties in international banking," BIS Quarterly Review, Bank for International Settlements, September.
    5. Stefan Avdjiev & Bryan Hardy & Patrick McGuire & Goetz von Peter, 2020. "Home sweet host: Prudential and monetary policy spillovers through global banks," BIS Working Papers 853, Bank for International Settlements.
    6. Mathias Drehmann & Claudio Borio & Kostas Tsatsaronis, 2011. "Anchoring Countercyclical Capital Buffers: The role of Credit Aggregates," International Journal of Central Banking, International Journal of Central Banking, vol. 7(4), pages 189-240, December.
    7. Iñaki Aldasoro & Torsten Ehlers & Patrick McGuire & Goetz von Peter, 2020. "Global banks' dollar funding needs and central bank swap lines," BIS Bulletins 27, Bank for International Settlements.
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    Cited by:

    1. Mark M. Spiegel, 2021. "Monetary Policy Spillovers Under Covid-19: Evidence from U.S. Foreign Bank Subsidiaries," Working Paper Series 2021-14, Federal Reserve Bank of San Francisco.
    2. Armando Silva & Zbigniew Korzeb & Pawe? Niedzió?ka, 2021. "Impact of the COVID-19 crisis on the Portuguese banking system. Linear ordering method," Estudios Gerenciales, Universidad Icesi, vol. 37(159), pages 226-241, June.

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    More about this item

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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