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Resilience and Fragility in Global Banking: Impacts on Emerging Economies

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  • Conesa, Marina
  • Lotti, Giulia
  • Powell, Andrew

Abstract

Theory suggests both resilience and fragility in banking networks. This paper finds both, exploiting a new database of cross-border syndicated lending to developing countries from 1993 to 2017. Shocks propagate via co-lenders driven by central players, but shocks impacting fringe banks have little impact. The global financial crisis and the appearance of South-South lenders prompted a decline in network centrality, suggesting greater resilience to normal shocks. Multilateral Development Banks may play a catalytic role, but their small size limits their ability to mitigate shock propagation. The ongoing Covid-19 crisis is not a normal shock, is hitting central players and will likely provoke significant contagion.

Suggested Citation

  • Conesa, Marina & Lotti, Giulia & Powell, Andrew, 2020. "Resilience and Fragility in Global Banking: Impacts on Emerging Economies," IDB Publications (Working Papers) 10459, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:10459
    DOI: http://dx.doi.org/10.18235/0002504
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    More about this item

    Keywords

    Banks; Syndicate loans; Shock propagation; Systemic banking crises;
    All these keywords.

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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