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 2020/249, IMF Working Papers from International Monetary Fund

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 cross-border 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: Chinese banks; Trade; FDI; Gravity model; WP; borrower country; cross-border lending; EMDE borrower; bank lending; lending bank; parent country; Cross-border banking; portfolio investment; Chinese bank; U.S. dollar; Bank credit; Portfolio investment; Foreign direct investment; Foreign banks; Global (search for similar items in EconPapers)
Pages: 47
Date: 2020-11-13
New Economics Papers: this item is included in nep-ban, nep-cwa and nep-int
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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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