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Channels of transmission of the 2007/09 global crisis to international bank lending in developing countries

Author

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  • Adams-Kane, Jonathon
  • Jia, Yueqing
  • Lim, Jamus Jerome

Abstract

During a financial crisis, credit provision by international banks may be stymied by three distinct, but related, channels: changes in lending standards as a result of increased economic uncertainty, changes in funding availability from interbank liquidity markets, and changes in solvency due to effects on bank balance sheets. This paper illuminates the manner by which each of these channels independently operated to affect developed-country bank lending in developing countries during the global financial crisis of 2007/09. It quantifies how changes in banks'uncertainty about the value of their asset holdings, access to interbank liquidity, and internal balance sheet considerations altered their supply of credit in the run-up, during, and in the immediate aftermath of the financial crisis, both in terms of their relative magnitudes, as well as the sensitivity of these magnitudes to the crisis.

Suggested Citation

  • Adams-Kane, Jonathon & Jia, Yueqing & Lim, Jamus Jerome, 2012. "Channels of transmission of the 2007/09 global crisis to international bank lending in developing countries," Policy Research Working Paper Series 6011, The World Bank.
    • Handle: RePEc:wbk:wbrwps:6011
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    File URL: http://documents.worldbank.org/curated/en/368981468153272177/pdf/WPS6011.pdf
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    Cited by:

    1. van Bergeijk, P.A.G., 2012. "Where the financial and economic crisis does bite : Impact on the Least Developed Countries," ISS Working Papers - General Series 542, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    2. Adams-Kane, Jonathon & Jia, Yueqing & Lim, Jamus Jerome, 2015. "Global transmission channels for international bank lending in the 2007–09 financial crisist," Journal of International Money and Finance, Elsevier, vol. 56(C), pages 97-113.
    3. Zapata S., Willy W. & Eisele, María Kristina, 2013. "Possible transmission of adverse shocks from the recent financial crisis to Central America through trade finance," Estudios y Perspectivas – Sede Subregional de la CEPAL en México 4926, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

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