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Running for the Exit: International Banks and Crisis Transmission

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  • Ralph de Haas
  • Neeltje van Horen

Abstract

The global financial crisis has reignited the debate about the risks of financial globalization, in particular the international transmission of financial shocks. We use data on individual loans by the largest international banks to their various countries of operation 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 us to disentangle credit supply and demand and to control for general bank characteristics. We 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.

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Bibliographic Info

Paper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 279.

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Date of creation: Feb 2011
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Handle: RePEc:dnb:dnbwpp:279

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Keywords: Crisis transmission; sudden stop; cross-border lending; syndicated loans;

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