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Global banking with a Latin American rhythm

Author

Listed:
  • Berger, Allen N.
  • Karlström, Peter
  • Karolyi, Stephen A.
  • Ossandon Busch, Matias
  • Pinzon-Puerto, Freddy
  • Roman, Raluca A.

Abstract

How does global banking impact financial stability and the real economy, particularly in emerging market economies? This paper revisits this question through the lens of new data and recent empirical findings in the banking literature. Considering this evidence, we illustrate how global banks are more prone to engaging in quantity and price credit rationing during crises, particularly when dealing with opaque borrowers abroad. However, in a context where shocks emerge in the real sector — for instance, through trade shocks — global banks can play a key role in making trade flows more resilient. We primarily use Latin America as our region of study as it is a region where globalization and deglobalization have had substantial impacts. Our findings support the notion that prudential financial stability frameworks can help to grasp the benefits of banking globalization while mitigating its downside risks.

Suggested Citation

  • Berger, Allen N. & Karlström, Peter & Karolyi, Stephen A. & Ossandon Busch, Matias & Pinzon-Puerto, Freddy & Roman, Raluca A., 2026. "Global banking with a Latin American rhythm," LSE Research Online Documents on Economics 130318, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:130318
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    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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