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The exposure of international bank loans to third-country risk: an empirical analysis of overdue claims

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  • Drew Dahl
  • Andrew Logan

Abstract

The paper analyses the performance outcomes on foreign credits made by UK-owned banks to borrowers in 17 foreign countries between 1991 and 2000. The analysis is unique in its use of bank-specific data on overdue credits in individual countries. Results indicate that credit repayment in a given country is influenced by exports to, and economic activity in, another country linked by trading relationships. The observed cross-country interdependence is relevant to the understanding of risk management practices of international banks.

Suggested Citation

  • Drew Dahl & Andrew Logan, 2005. "The exposure of international bank loans to third-country risk: an empirical analysis of overdue claims," Bank of England working papers 247, Bank of England.
  • Handle: RePEc:boe:boeewp:247
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    File URL: http://www.bankofengland.co.uk/research/Documents/workingpapers/2004/WP247.pdf
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