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International shock transmission after the Lehman Brothers collapse – evidence from syndicated lending

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  • Ralph De Haas

    ()
    (EBRD)

  • Neeltje Van Horen

    ()
    (De Nederlandsche Bank)

Abstract

After Lehman Brothers filed for bankruptcy in September 2008, cross-border bank lending contracted sharply. To explain the severity and variation in this contraction, we analyse detailed data on cross-border syndicated lending by 75 banks to 59 countries. We find that banks that had to write down sub-prime assets, refinance large amounts of long-term debt, and experienced sharp declines in their market-to-book ratio, transmitted these shocks across borders by curtailing their lending abroad. While shocked banks differentiated among countries in much the same way as less constrained banks, they restricted their lending more to small borrowers.

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Bibliographic Info

Paper provided by European Bank for Reconstruction and Development, Office of the Chief Economist in its series Working Papers with number 142.

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Length: 11 pages
Date of creation: Jan 2012
Date of revision:
Publication status: Published in Working papers 142, European Bank for Reconstruction and Development
Handle: RePEc:ebd:wpaper:142

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

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  1. Ivashina, Victoria & Scharfstein, David, 2010. "Bank lending during the financial crisis of 2008," Journal of Financial Economics, Elsevier, Elsevier, vol. 97(3), pages 319-338, September.
  2. Chami, Ralph & Cosimano, Thomas F., 2010. "Monetary policy with a touch of Basel," Journal of Economics and Business, Elsevier, Elsevier, vol. 62(3), pages 161-175, May.
  3. Nicola Cetorelli & Linda S. Goldberg, 2010. "Global Banks and International Shock Transmission: Evidence from the Crisis," NBER Working Papers 15974, National Bureau of Economic Research, Inc.
  4. Giannetti, Mariassunta & Laeven, Luc, 2012. "The flight home effect: Evidence from the syndicated loan market during financial crises," Journal of Financial Economics, Elsevier, Elsevier, vol. 104(1), pages 23-43.
  5. Eric S. Rosengren & Joe Peek, 2000. "Collateral Damage: Effects of the Japanese Bank Crisis on Real Activity in the United States," American Economic Review, American Economic Association, American Economic Association, vol. 90(1), pages 30-45, March.
  6. Ralph De Haas & Neeltje Van Horen, 2013. "Running for the Exit? International Bank Lending During a Financial Crisis," Review of Financial Studies, Society for Financial Studies, Society for Financial Studies, vol. 26(1), pages 244-285.
  7. Heitor Almeida & Murillo Campello & Bruno Laranjeira & Scott Weisbenner, 2009. "Corporate Debt Maturity and the Real Effects of the 2007 Credit Crisis," NBER Working Papers 14990, National Bureau of Economic Research, Inc.
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