Channels of Transmission of the 2007/09 Global Crisis to International Bank Lending in Developing Countries [electronic resource] / Jonathon Adams-Kane
Material type: TextPublication details: Washington, D.C., The World Bank, 2012Description: 1 online resource (31 p.)Subject(s): Access to Finance | Bankruptcy and Resolution of Financial Distress | Banks & Banking Reform | Debt Markets | Economic Theory & Research | Finance and Financial Sector Development | Financial crisis | International bank lending | Macroeconomics and Economic Growth | Transmission channelsAdditional physical formats: Adams-Kane, Jonathon.: Channels of Transmission of the 2007/09 Global Crisis to International Bank Lending in Developing Countries.Online resources: Click here to access online Abstract: During a financial crisis, credit provision by international banks may be stymied by three distinct, but related, channels: changes in lending standards as a result of increased economic uncertainty, changes in funding availability from interbank liquidity markets, and changes in solvency due to effects on bank balance sheets. This paper illuminates the manner by which each of these channels independently operated to affect developed-country bank lending in developing countries during the global financial crisis of 2007/09. It quantifies how changes in banks' uncertainty about the value of their asset holdings, access to interbank liquidity, and internal balance sheet considerations altered their supply of credit in the run-up, during, and in the immediate aftermath of the financial crisis, both in terms of their relative magnitudes, as well as the sensitivity of these magnitudes to the crisis.During a financial crisis, credit provision by international banks may be stymied by three distinct, but related, channels: changes in lending standards as a result of increased economic uncertainty, changes in funding availability from interbank liquidity markets, and changes in solvency due to effects on bank balance sheets. This paper illuminates the manner by which each of these channels independently operated to affect developed-country bank lending in developing countries during the global financial crisis of 2007/09. It quantifies how changes in banks' uncertainty about the value of their asset holdings, access to interbank liquidity, and internal balance sheet considerations altered their supply of credit in the run-up, during, and in the immediate aftermath of the financial crisis, both in terms of their relative magnitudes, as well as the sensitivity of these magnitudes to the crisis.
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