Loyal Lenders or Fickle Financiers: Foreign Banks in Latin America
Arturo Galindo (),
Alejandro Micco () and
No 1934, IDB Publications (Working Papers) from Inter-American Development Bank
We suggest that foreign banks may represent a trade-off for their developing country hosts. A portfolio model is developed to show that a more diversified international bank may be one of lower, overall risk and less susceptible to funding shocks but may react more to shocks that affect expected returns in a particular host country. Foreign banks have become particularly important in Latin America where we find strong support for these theoretical predictions using a dataset of individual Latin American banks in 11 countries. Moreover, we find no significant difference between the size of the response of foreign banks to a negative liquidity shock and a positive opportunity shock: in both cases the market share of foreign banks in credit increases.
Keywords: WP-529 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
https://publications.iadb.org/publications/english ... in-Latin-America.pdf (application/pdf)
Working Paper: Loyal Lenders or Fickle Financiers: Foreign Banks in Latin America (2005)
Working Paper: Loyal Lenders or Fickle Financiers: Foreign Banks in Latin America (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:1934
Access Statistics for this paper
More papers in IDB Publications (Working Papers) from Inter-American Development Bank Contact information at EDIRC.
Bibliographic data for series maintained by Felipe Herrera Library ().