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Banking on foreigners : the behavior of international Bank lending to Latin America, 1985-2000

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  • Martinez Peria, Maria Soledad
  • Powell, Andrew
  • Hollar, Ivanna Vladkova

Abstract

Rising international bank financing to developing countries has fueled a debate on the behavior of these claims. The authors analyze claims from seven home (lender) countries on ten host (borrower) countries in Latin America. They find that banks transmit shocks from their home countries and changes in their claims on other countries spill over to individual hosts. However, lending has become less"indiscriminate"and more responsive to host conditions over time. Responsiveness to the latter becomes less"pro-cyclical"as exposure increases. Finally, foreign bank lending reacts more to positive than to negative host shocks and is not significantly curtailed during crises.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2893.

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Date of creation: 30 Sep 2002
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Handle: RePEc:wbk:wbrwps:2893

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Keywords: Banks&Banking Reform; Financial Intermediation; Economic Theory&Research; Payment Systems&Infrastructure; Financial Crisis Management&Restructuring; Banks&Banking Reform; Financial Intermediation; Financial Crisis Management&Restructuring; Economic Theory&Research; Insurance&Risk Mitigation;

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  1. Calvo, Guillermo A. & Mendoza, Enrique G., 2000. "Rational contagion and the globalization of securities markets," Journal of International Economics, Elsevier, Elsevier, vol. 51(1), pages 79-113, June.
  2. Linda S. Goldberg, 2001. "When is U.S. bank lending to emerging markets volatile?," Staff Reports, Federal Reserve Bank of New York 119, Federal Reserve Bank of New York.
  3. Leonardo Leiderman & Carmen Reinhart & Guillermo Calvo, 1992. "Capital Inflows and Real Exchange Rate Appreciation in Latin America," IMF Working Papers, International Monetary Fund 92/62, International Monetary Fund.
  4. B. Gerard Dages & Linda Goldberg & Daniel Kinney, 2000. "Foreign and domestic bank participation in emerging markets: lessons from Mexico and Argentina," Economic Policy Review, Federal Reserve Bank of New York, Federal Reserve Bank of New York, issue Sep, pages 17-36.
  5. Fernandez-Arias, Eduardo, 1996. "The new wave of private capital inflows: Push or pull?," Journal of Development Economics, Elsevier, Elsevier, vol. 48(2), pages 389-418, March.
  6. 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.
  7. International Monetary Fund, 2000. "Spillovers Through Banking Centers," IMF Working Papers, International Monetary Fund 00/88, International Monetary Fund.
  8. Chuhan, Punam & Claessens, Stijn & Mamingi, Nlandu, 1998. "Equity and bond flows to Latin America and Asia: the role of global and country factors," Journal of Development Economics, Elsevier, Elsevier, vol. 55(2), pages 439-463, April.
  9. Joe Peek & Eric S. Rosengren, 2000. "Implications of the globalization of the banking sector: the Latin American experience," New England Economic Review, Federal Reserve Bank of Boston, Federal Reserve Bank of Boston, issue Sep, pages 45-62.
  10. Michael Bordo & Barry Eichengreen & Daniela Klingebiel & Maria Soledad Martinez-Peria, 2001. "Is the crisis problem growing more severe?," Economic Policy, CEPR;CES;MSH, CEPR;CES;MSH, vol. 16(32), pages 51-82, 04.
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Cited by:
  1. Ahmet Faruk Aysan & S. P. Ceyhan, 2006. "Globalization of Turkey's Banking Sector: The Determinants of Foreign Banking Penetration in Turkey," Working Papers, Bogazici University, Department of Economics 2006/20, Bogazici University, Department of Economics.
  2. Ceballos, Francisco & Didier, Tatiana & Schmukler, Sergio L., 2012. "Financial Globalization in Emerging Countries: Diversification vs. Offshoring," ADBI Working Papers, Asian Development Bank Institute 389, Asian Development Bank Institute.
  3. Burcu Aydin, 2008. "Banking Structure and Credit Growth in Central and Eastern European Countries," IMF Working Papers, International Monetary Fund 08/215, International Monetary Fund.
  4. Cecile Bastidon & Philippe Gilles & Nicolas Huchet, 2008. "A Selective Bail-Out International Lending of Last Resort Model," Annals of Economics and Finance, Society for AEF, vol. 9(1), pages 103-114, May.
  5. Eric Santor, 2007. "Contagion and the composition of Canadian banks' foreign asset portfolios: do financial crises matter?," CGFS Papers chapters, Bank for International Settlements, in: Bank for International Settlements (ed.), Research on global financial stability: the use of BIS international financial statistics, volume 29, pages 32-52 Bank for International Settlements.
  6. Eugenio Cerutti & Stijn Claessens & Patrick McGuire, 2012. "Systemic risk in global banking: what can available data tell us and what more data are needed?," BIS Working Papers 376, Bank for International Settlements.
  7. Sirtaine, Sophie & Skamnelos, Ilias, 2007. "Credit growth in emerging Europe : a cause for stability concerns?," Policy Research Working Paper Series, The World Bank 4281, The World Bank.
  8. Eugenio Cerutti & Patrick M. McGuire & Stijn Claessens, 2011. "Systemic Risks in Global Banking," IMF Working Papers, International Monetary Fund 11/222, International Monetary Fund.

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