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Financial Crises and the Composition of Cross-Border Lending

Eugenio Cerutti, Galina Hale and Camelia Minoiu

No 2014-20, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: We examine the composition and drivers of cross-border bank lending between 1995 and 2012, distinguishing between syndicated and non-syndicated loans. We show that on-balance sheet syndicated loan exposures, which account for almost one third of total cross-border loan exposures, increased during the global financial crisis due to large drawdowns on credit lines extended before the crisis. Our empirical analysis of the drivers of cross-border loan exposures in a large bilateral dataset leads to three main results. First, banks with lower levels of capital favor syndicated over other kinds of cross-border loans. Second, borrower country characteristics such as level of development, economic size, and capital account openness, are less important in driving syndicated than non-syndicated loan activity, suggesting a diversification motive for syndication. Third, information asymmetries between lender and borrower countries became more binding for both types of cross-border lending activity during the recent crisis.

Keywords: cross-border banking; syndicated loans; global financial crisis; BIS international banking statistics; Dealogic Loan Analytics (search for similar items in EconPapers)
JEL-codes: F30 F65 G15 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2014-08-10
New Economics Papers: this item is included in nep-ban and nep-ifn
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Related works:
Working Paper: Financial Crises and the Composition of Cross-Border Lending (2023) Downloads
Journal Article: Financial crises and the composition of cross-border lending (2015) Downloads
Working Paper: Financial Crises and the Composition of Cross-Border Lending (2014) Downloads
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DOI: 10.24148/wp2014-20

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