Who Lends Before Banking Crises? Evidence from the International Syndicated Loan Market
64 Pages Posted: 11 Feb 2021
There are 2 versions of this paper
Who Lends Before Banking Crises? Evidence from the International Syndicated Loan Market
Date Written: January 2021
Abstract
We show that foreign lenders and low market share lenders extend more credit in comparison to other lenders during lending booms leading to banking crises, but not during other credit expansions. Less established lenders also increase the amount of credit they extend to riskier borrowers, without asking for collateral or imposing covenants and higher interest rates. Our results suggest that taking lenders' characteristics into account could provide an indicator for how much risk an economy is accumulating and be a useful barometer for macroprudential policies.
JEL Classification: F3, G21
Suggested Citation: Suggested Citation