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Transmission of Shocks Through International Lending of Commercial Banks to LDCs

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  • Shimokawa, Satoru
  • Kyle, Steven C.

Abstract

We analyze the transmission of shocks through international bank lending, as is suggested in Kaminsky and Reinhart [6], by examining the bank’s international lending behavior. We develop a portfolio selection model, which explicitly includes the economic condition of the bank’s home county. This model is estimated using data from the banks of the six largest international creditor countries over the 1989-99 period. Our results clarify the interrelationship between the condition of banks’ home country and international bank lending. This finding demonstrates two types of transmission of shocks through international bank lending: [i] transmission from a creditor country to debtor countries and [ii] transmission from a debtor country to other debtor countries via a creditor.

Suggested Citation

  • Shimokawa, Satoru & Kyle, Steven C., 2003. "Transmission of Shocks Through International Lending of Commercial Banks to LDCs," Working Papers 127238, Cornell University, Department of Applied Economics and Management.
    • Handle: RePEc:ags:cudawp:127238
    DOI: 10.22004/ag.econ.127238
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    References listed on IDEAS

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    Cited by:

    1. Adesola Ibironke, 2021. "Africa’s Trade with China and US: Has COVID-19 Changed the Trends of Trade?," Journal of Economic Impact, Science Impact Publishers, vol. 3(2), pages 55-66.

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