Foreign bank lending: Evidence from the global financial crisis
In: Journal of international economics, Band 92, S. S22-S35
ISSN: 0022-1996
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In: Journal of international economics, Band 92, S. S22-S35
ISSN: 0022-1996
In: Bank of Italy Temi di Discussione (Working Paper) No. 926
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Working paper
In: Swiss Finance Institute Research Paper No. 20-99
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Working paper
In: ECB Working Paper No. 2322
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In: ECB Working Paper No. 2125
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In: Bank of Italy Occasional Paper No. 364
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Working paper
In: EEREV-D-22-00475
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In: INEC-D-22-00040
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This paper explores whether foreign intermediaries stabilise or destabilise lending to the real economy in the presence of sovereign stress in the domestic economy and abroad. Tensions in the government debt market may lead to serious disruptions in the provision of lending (i.e., the so-called "doom loop"). In this context, the presence of foreign banks poses a fundamental, yet unexplored, trade-off. On the one hand, domestic sovereign shocks are broadly inconsequential for the lending capacity of foreign banks, given that their funding conditions are not hampered by such shocks. On the other, these intermediaries may react more harshly than domestic banks to a deterioration in local loan risk and demand conditions. We exploit granular and confidential data on euro area banks operating in different countries to assess this trade-off. Overall, the presence of foreign lenders is found to stabilise lending, thus mitigating the doom loop.
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In: Bank of Italy Temi di Discussione (Working Paper) No. 1094
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In: CEPR Discussion Paper No. DP17053
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In: Swiss Finance Institute Research Paper No. 21-13
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In: ECB Working Paper No. 20202480
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In: Bank of Italy Temi di Discussione (Working Paper) No. 1091
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