Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/60730
Authors: 
Cetorelli, Nicola
Goldberg, Linda S.
Year of Publication: 
2010
Series/Report no.: 
Staff Report, Federal Reserve Bank of New York 446
Abstract: 
Global banks played a significant role in transmitting the 2007-09 financial crisis to emerging-market economies. We examine adverse liquidity shocks on main developedcountry banking systems and their relationships to emerging markets across Europe, Asia, and Latin America, isolating loan supply from loan demand effects. Loan supply in emerging markets across Europe, Asia, and Latin America was affected significantly through three separate channels: 1) a contraction in direct, cross-border lending by foreign banks; 2) a contraction in local lending by foreign banks' affiliates in emerging markets; and 3) a contraction in loan supply by domestic banks, resulting from the funding shock to their balance sheets induced by the decline in interbank, cross-border lending. Policy interventions, such as the Vienna Initiative introduced in Europe, influenced the lendingchannel effects on emerging markets of shocks to head-office balance sheets.
Subjects: 
Bank
global
liquidity
transmission
capital markets
cross-border lending
emerging market
JEL: 
E44
F36
G32
Document Type: 
Working Paper

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