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Who Lends Before Banking Crises? Evidence from the International Syndicated Loan Market

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  • Giannetti, Mariassunta
  • Jang, Yeejin

Abstract

We show that foreign lenders and low market share lenders extend more credit in comparison to other lenders during lending booms leading to banking crises, but not during other credit expansions. Less established lenders also increase the amount of credit they extend to riskier borrowers, without asking for collateral or imposing covenants and higher interest rates. Our results suggest that taking lenders’ characteristics into account could provide an indicator for how much risk an economy is accumulating and be a useful barometer for macroprudential policies.

Suggested Citation

  • Giannetti, Mariassunta & Jang, Yeejin, 2021. "Who Lends Before Banking Crises? Evidence from the International Syndicated Loan Market," CEPR Discussion Papers 15737, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15737
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    More about this item

    Keywords

    Foreign banks; Crises; Credit booms;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • F3 - International Economics - - International Finance

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