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Global transmission channels for international bank lending in the 2007–09 financial crisist

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

Abstract

During a financial crisis, credit provision by international banks may be affected by three global channels: changes in willingness to lend from increased economic uncertainty, in funding availability from interbank liquidity markets, and in solvency from weakened balance sheets. In this paper, we examine the extent to which each channel affected bank lending in developing countries during the global financial crisis of 2007–09. We find evidence that the liquidity and uncertainty channels were important, although lending sensitivity to these channels remained unchanged during the crisis. We also find heterogeneity in the lending behavior of European versus U.S. banks.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:jimfin:v:56:y:2015:i:c:p:97-113
    DOI: 10.1016/j.jimonfin.2014.11.020
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    References listed on IDEAS

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    1. Buch, Claudia M. & Koch, Cathérine Tahmee & Koetter, Michael, 2011. "Crises, rescues, and policy transmission through international banks," Discussion Paper Series 1: Economic Studies 2011,15, Deutsche Bundesbank.
    2. Delis, Manthos D. & Kouretas, Georgios P. & Tsoumas, Chris, 2014. "Anxious periods and bank lending," Journal of Banking & Finance, Elsevier, vol. 38(C), pages 1-13.
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    4. 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.
    5. Bruno, Giovanni S.F., 2005. "Approximating the bias of the LSDV estimator for dynamic unbalanced panel data models," Economics Letters, Elsevier, vol. 87(3), pages 361-366, June.
    6. Valentina Bruno & Hyun Song Shin, 2013. "Capital Flows, Cross-Border Banking and Global Liquidity," NBER Working Papers 19038, National Bureau of Economic Research, Inc.
    7. Ralph De Haas & Neeltje Van Horen, 2012. "International Shock Transmission after the Lehman Brothers Collapse: Evidence from Syndicated Lending," American Economic Review, American Economic Association, vol. 102(3), pages 231-237, May.
    8. 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.
    9. repec:pri:cepsud:237a%20shin is not listed on IDEAS
    10. Linda S. Goldberg, 2002. "When Is U.S. Bank Lending to Emerging Markets Volatile?," NBER Chapters, in: Preventing Currency Crises in Emerging Markets, pages 171-196, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Klára Baková, 2018. "The Financial Accelerator in Europe after the Financial Crisis," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 4(2), pages 143-155, December.
    2. Ábel, István, 2015. "A monetáris politika globális tendenciái és a stabilitási kockázatok [Financial stability concerns and global exposure of monetary policy]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(3), pages 284-304.
    3. Jorge Mario Uribe Gil & Isabel Espinosa Castillo, 2018. "Efectos asimétricos de cambios en la tasa de interés sobre empresas del sector manufacturero colombiano," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 10(1), pages 173-187, February.
    4. Ashraf, Badar Nadeem & Zheng, Changjun & Jiang, Chonghui & Qian, Ningyu, 2020. "Capital regulation, deposit insurance and bank risk: International evidence from normal and crisis periods," Research in International Business and Finance, Elsevier, vol. 52(C).
    5. Juan S. Holguín & Jorge M. Uribe, 2020. "The credit supply channel of monetary policy: evidence from a FAVAR model with sign restrictions," Empirical Economics, Springer, vol. 59(5), pages 2443-2472, November.

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    More about this item

    Keywords

    International bank lending; Global transmission channels; Financial crisis;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G01 - Financial Economics - - General - - - Financial Crises
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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