Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/195168
Authors: 
Dörr, Sebastian
Schaz, Philipp
Year of Publication: 
2019
Series/Report no.: 
Working Paper 288
Abstract: 
We classify a large sample of banks according to the geographic diversification of their international syndicated loan portfolio. Our results show that diversified banks maintain higher loan supply during banking crises in borrower countries. The positive loan supply effects lead to higher investment and employment growth for firms. Diversified banks are stabilizing due to their ability to raise additional funding during times of distress, which also shields connected markets from spillovers. Further distinguishing banks by nationality reveals a pecking order: diversified domestic banks are the most stable source of funding, while foreign banks with little diversification are the most fickle. Our findings suggest that the decline in financial integration since the recent crisis increases countries' vulnerability to local shocks.
Subjects: 
Diversification
Global Banking
Financial Stability
Syndicated Loan Market
Banking Crisis
JEL: 
F30
G01
G15
G21
G32
Persistent Identifier of the first edition: 
Document Type: 
Working Paper
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