International Spillovers and Local Credit Cycles

Julian di Giovanni, Şebnem Kalemli-Özcan, Mehmet Ulu and Yusuf Baskaya

The Review of Economic Studies, 2022, vol. 89, issue 2, 733-773

Abstract: This article studies the transmission of the Global Financial Cycle (GFC) to domestic credit market conditions in a large emerging market, Turkey, over 2003–13. We use administrative data covering the universe of corporate credit transactions matched to bank balance sheets to document four facts: (1) an easing in global financial conditions leads to lower borrowing costs and an increase in local lending; (2) domestic banks more exposed to international capital markets transmit the GFC locally; (3) the fall in local currency borrowing costs is larger than foreign currency borrowing costs due to the co-movement of the uncovered interest rate parity (UIP) premium with the GFC over time; (4) data on posted collateral for new loan issuances show that collateral constraints do not relax during the boom phase of the GFC.

Keywords: Global financial cycle; Bank credit; Non-core funding; Risk premium; Collateral constraints; E0; F0; F1 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (21)

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Related works:
Working Paper: International spillovers and local credit cycles (2020)
Working Paper: International Spillovers and Local Credit Cycles (2017)
Working Paper: International Spillovers and Local Credit Cycles (2017)
Working Paper: International Spillovers and Local Credit Cycles (2017)
Working Paper: International Spillovers and Local Credit Cycles (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:89:y:2022:i:2:p:733-773.

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