Banking on foreigners: the behavior of international Bank lending to Latin America, 1985-2000

Maria Soledad Martinez Peria, Andrew Powell and Ivanna Vladkova Hollar

No 2893, Policy Research Working Paper Series from The World Bank

Abstract: Rising international bank financing to developing countries has fueled a debate on the behavior of these claims. The authors analyze claims from seven home (lender) countries on ten host (borrower) countries in Latin America. They find that banks transmit shocks from their home countries and changes in their claims on other countries spill over to individual hosts. However, lending has become less"indiscriminate"and more responsive to host conditions over time. Responsiveness to the latter becomes less"pro-cyclical"as exposure increases. Finally, foreign bank lending reacts more to positive than to negative host shocks and is not significantly curtailed during crises.

Keywords: Banks&Banking Reform; Financial Intermediation; Economic Theory&Research; Payment Systems&Infrastructure; Financial Crisis Management&Restructuring; Banks&Banking Reform; Financial Intermediation; Financial Crisis Management&Restructuring; Economic Theory&Research; Insurance&Risk Mitigation (search for similar items in EconPapers)
Date: 2002-09-30
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Related works:
Working Paper: Banking on Foreigners: The Behaviour of International Bank Lending to Latin America, 1985-2000" (2002)
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