The Global Credit Crunch and Foreign Banks' Lending to Emerging Markets
AbstractThe recent global financial turmoil raised questions about the stability of foreign banks'' financing to emerging market countries. While foreign banks'' lending growth to most emerging market regions contracted sharply, lending to Latin America and the Caribbean (LAC) was significantly more resilient. Analyzing detailed BIS data on global banks'' lending to LAC countries-whether extended directly by their headquarters abroad or by their local affiliates in host countries-we show that the propagation of the global credit crunch was significantly more muted in countries where most of foreign banks'' lending was channeled in domestic currency. We also show that foreign banks'' involvement in LAC has differed in fundamental ways from that in other regions, with most of their lending to LAC conducted by their local subsidiaries, denominated in domestic currency and funded from a domestic deposit base. These characteristics help explain why LAC has not been struck as hard as other emerging markets by the global deleveraging and pullback in foreign banks'' lending.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 10/102.
Date of creation: 01 Apr 2010
Date of revision:
Contact details of provider:
Postal: International Monetary Fund, Washington, DC USA
Phone: (202) 623-7000
Fax: (202) 623-4661
Web page: http://www.imf.org/external/pubind.htm
More information through EDIRC
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-29 (All new papers)
- NEP-BAN-2010-05-29 (Banking)
- NEP-IFN-2010-05-29 (International Finance)
- NEP-MON-2010-05-29 (Monetary Economics)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Cull, Robert & Martínez Pería, María Soledad, 2013.
"Bank ownership and lending patterns during the 2008–2009 financial crisis: Evidence from Latin America and Eastern Europe,"
Journal of Banking & Finance,
Elsevier, vol. 37(12), pages 4861-4878.
- Cull, Robert & Peria, Maria Soledad Martinez, 2012. "Bank ownership and lending patterns during the 2008-2009 financial crisis : evidence from Latin America and Eastern Europe," Policy Research Working Paper Series 6195, The World Bank.
- Eugenio Cerutti & Patrick M. McGuire & Stijn Claessens, 2011.
"Systemic Risks in Global Banking: What Available Data can tell us and What More Data are Needed?,"
IMF Working Papers
11/222, International Monetary Fund.
- Eugenio Cerutti & Stijn Claessens & Patrick McGuire, 2012. "Systemic Risks in Global Banking: What Available Data Can Tell Us and What More Data are Needed?," NBER Chapters, in: Risk Topography: Systemic Risk and Macro Modeling National Bureau of Economic Research, Inc.
- Eugenio Cerutti & Stijn Claessens & Patrick McGuire, 2012. "Systemic Risks in Global Banking: What Available Data can tell us and What More Data are Needed?," NBER Working Papers 18531, National Bureau of Economic Research, Inc.
- Gozgor, Giray, 2014. "Determinants of domestic credit levels in emerging markets: The role of external factors," Emerging Markets Review, Elsevier, vol. 18(C), pages 1-18.
- Pontines, Victor & Siregar, Reza Y., 2012.
"How Should We Bank With Foreigners?—An Empirical Assessment of Lending Behavior of International Banks to Six East Asian Economies,"
ADBI Working Papers
386, Asian Development Bank Institute.
- Victor Pontines & Reza Y. Siregar, 2012. "How Should We Bank With Foreigners? An Empirical Assessment of Lending Behaviour of International Banks to Six East Asian Economies," Occasional Papers, South East Asian Central Banks (SEACEN) Research and Training Centre, number occ54, June.
- Pontines, Victor & Siregar, Reza Y., 2014. "How should we bank with foreigners? An empirical assessment of lending behavior of international banks to six East Asian economies," International Review of Economics & Finance, Elsevier, vol. 29(C), pages 552-568.
- Jeon, Bang & Olivero, María & Wu, Ji, 2012.
"Multinational Banking and the International Transmission of Financial Shocks: Evidence from Foreign Bank Subsidiaries,"
School of Economics Working Paper Series
2012-2, LeBow College of Business, Drexel University.
- Jeon, Bang Nam & Olivero, María Pía & Wu, Ji, 2013. "Multinational banking and the international transmission of financial shocks: Evidence from foreign bank subsidiaries," Journal of Banking & Finance, Elsevier, vol. 37(3), pages 952-972.
- Nicola Cetorelli & Linda S. Goldberg, 2011.
"Liquidity Management of U.S. Global Banks: Internal Capital Markets in the Great Recession,"
in: Global Financial Crisis
National Bureau of Economic Research, Inc.
- Cetorelli, Nicola & Goldberg, Linda S., 2012. "Liquidity management of U.S. global banks: Internal capital markets in the great recession," Journal of International Economics, Elsevier, vol. 88(2), pages 299-311.
- Nicola Cetorelli & Linda S. Goldberg, 2011. "Liquidity management of U.S. global banks: Internal capital markets in the great recession," NBER Working Papers 17355, National Bureau of Economic Research, Inc.
- Nicola Cetorelli & Linda Goldberg, 2011. "Liquidity management of U.S. global banks: internal capital markets in the Great Recession," Staff Reports 511, Federal Reserve Bank of New York.
- Clarke, George R.G. & Cull, Robert & Kisunko, Gregory, 2012.
"External finance and firm survival in the aftermath of the crisis : evidence from Eastern Europe and Central Asia,"
Policy Research Working Paper Series
6050, The World Bank.
- Clarke, George R.G. & Cull, Robert & Kisunko, Gregory, 2012. "External finance and firm survival in the aftermath of the crisis: Evidence from Eastern Europe and Central Asia," Journal of Comparative Economics, Elsevier, vol. 40(3), pages 372-392.
- Siregar, Reza & Wihardja, Monica, 2013. "Fragile Balance of Payment in Indonesia in the Midst of Recent Global Economic Uncertainties," MPRA Paper 49027, University Library of Munich, Germany.
- Imran, Kashif & Nishat, Mohammed, 2013. "Determinants of bank credit in Pakistan: A supply side approach," Economic Modelling, Elsevier, vol. 35(C), pages 384-390.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow) or (Hassan Zaidi).
If references are entirely missing, you can add them using this form.