Banking across borders: Are Chinese banks different?

Eugenio Cerutti, Catherine Koch and Swapan-Kumar Pradhan
Authors registered in the RePEc Author Service: Catherine Tahmee Casanova

No 892, BIS Working Papers from Bank for International Settlements

Abstract: We explore the global footprint of Chinese banks and compare it with that of other bank nationalities. Chinese banks have become the largest cross-border creditors for almost half of all emerging market and developing economies (EMDEs). Their global reach resembles that of banks from advanced economies (AEs). We take a nationality approach as international banks, and Chinese banks in particular, grant a substantial share of their cross-border loans from affiliates located abroad. But differences remain. Using a gravity model with a novel measure of distance capturing the role of foreign affiliates across all bank nationalities, we find that larger distances deter crossborder bank lending to EMDEs more than to AEs. For Chinese banks, however, distance deters lending to EMDEs less than for peer EMDE banks. We show that for all banks combined, bilateral economic interactions like trade, FDI and portfolio investment, positively correlate with lending. Chinese banks' lending to EMDEs also strongly correlates with trade, but not with FDI and, unlike other banks, it correlates negatively with portfolio investment.

Keywords: cross-border banking; Chinese banks; trade; FDI; gravity model (search for similar items in EconPapers)
JEL-codes: F34 F36 F65 G2 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2020-10
New Economics Papers: this item is included in nep-ban, nep-cna, nep-ifn and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Banking across borders: Are Chinese banks different? (2023)
Working Paper: Banking Across Borders: Are Chinese Banks Different? (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:892

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