Bilateral adjustment of bank assets: Boom and bust
Emerging Markets Review, 2018, vol. 36, issue C, 144-158
This paper provides evidence that bilateral factors were relevant for the adjustment of bank assets before and during the Great Recession. This finding is consistent with the theory that monitoring costs or informational frictions can help explain the adjustment of bank assets at a bilateral country level. Distance is a particularly relevant friction, and has non-uniform effects for advanced and emerging hosts. If the assets are denominated in domestic rather than foreign currency, this can reduce the negative effect of distance on adjustment. Further we find that trade, colonial ties and the history of a position are important for the bilateral adjustment of bank assets.
Keywords: Cross-border banking; Bilateral-banking; Financial crises (search for similar items in EconPapers)
JEL-codes: F30 F41 G15 G21 (search for similar items in EconPapers)
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Working Paper: Bilateral Adjustment of Bank Assets: Boom and Bust (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:36:y:2018:i:c:p:144-158
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