Global banking with a Latin American rhythm

Allen N. Berger, Peter Karlström, Stephen A. Karolyi, Matias Ossandon Busch, Freddy Pinzon-Puerto and Raluca A. Roman

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: How does global banking impact financial stability and the real economy, particularly in emerging market economies? This paper revisits this question through the lens of new data and recent empirical findings in the banking literature. Considering this evidence, we illustrate how global banks are more prone to engaging in quantity and price credit rationing during crises, particularly when dealing with opaque borrowers abroad. However, in a context where shocks emerge in the real sector — for instance, through trade shocks — global banks can play a key role in making trade flows more resilient. We primarily use Latin America as our region of study as it is a region where globalization and deglobalization have had substantial impacts. Our findings support the notion that prudential financial stability frameworks can help to grasp the benefits of banking globalization while mitigating its downside risks.

Keywords: international banking; global supply chains; financial stability; financial crises (search for similar items in EconPapers)
JEL-codes: F15 F36 G15 G21 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2026-02-23
New Economics Papers: this item is included in nep-ifn
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Published in Latin American Journal of Central Banking, 23, February, 2026, 7(1). ISSN: 2666-1438

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:130318

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