Who Lends Before Banking Crises? Evidence from the International Syndicated Loan Market

Mariassunta Giannetti and Yeejin Jang

No 15737, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We show that foreign lenders and low market share lenders extend more credit in comparison to other lenders during lending booms leading to banking crises, but not during other credit expansions. Less established lenders also increase the amount of credit they extend to riskier borrowers, without asking for collateral or imposing covenants and higher interest rates. Our results suggest that taking lenders’ characteristics into account could provide an indicator for how much risk an economy is accumulating and be a useful barometer for macroprudential policies.

Keywords: Foreign banks; Crises; Credit booms (search for similar items in EconPapers)
JEL-codes: F3 G21 (search for similar items in EconPapers)
Date: 2021-01
New Economics Papers: this item is included in nep-ban, nep-cba, nep-cwa and nep-fdg
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