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This paper studies whether lending by foreign banks is affected by financial crises. The paper pairs a bank-level dataset of foreign ownership with information on banking crises and examines whether the credit supply of majority foreignowned banks that underwent home-country crises differs systematically from that of other foreign banks. The baseline results show that banks exposed to homecountry crises in 2007 and 2008 exhibit changes in lending patterns that are lower by between 13 and 42 percent than their non-crisis counterparts. This finding is robust to potential alternative explanations and also holds, though less strongly, for the 1997-98 Asian crisis.
Several European countries face challenges reminiscent of those faced by the emerging economies of Latin America. The economic booms in some peripheral Euro-zone countries financed by large capital inflows; the credit and asset price booms and then the busts including Sudden Stops in capital flows; the strong interaction between sovereign debt and domestic banking systems; the role of foreign ... (View publication)
Europe faces challenges reminiscent of Latin American financial crises. The failure of recent liquidity support to normalize the situation in Europe suggests the need to refocus the policy debate on fundamentals: structural reform for growth and, where needed, restructuring to resolve banking crises and the debt overhang. Latin America’s experience yields relevant policy lessons for Europe on thos ... (View publication)
Deeper financial integration is expected to enable low-saving countries to increase domestic investment but also to increase crisis risks by facilitating the accumulation of risky foreign liabilities. This paper explores the connections between financial integration, investment and crisis risk to assess this tradeoff. It confirms expectations but also finds that the accumulation of safe foreign as ... (View publication)
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