Who Lends Before Banking Crises? Evidence from the International Syndicated Loan Market

45 Pages Posted: 17 Dec 2020

See all articles by Mariassunta Giannetti

Mariassunta Giannetti

Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swedish House of Finance

Yeejin Jang

UNSW Australia Business School, School of Banking and Finance

Date Written: November 29, 2020

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 a useful barometer for macroprudential policies.

Keywords: Foreign banks, crises, credit booms

JEL Classification: G21, F3

Suggested Citation

Giannetti, Mariassunta and Jang, Yeejin, Who Lends Before Banking Crises? Evidence from the International Syndicated Loan Market (November 29, 2020). Available at SSRN: https://ssrn.com/abstract=3739393 or http://dx.doi.org/10.2139/ssrn.3739393

Mariassunta Giannetti (Contact Author)

Stockholm School of Economics ( email )

P.O. Box 6501
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SE-113 83 Stockholm
Sweden
+46 8 736 9607 (Phone)
+46 8 312 327 (Fax)

HOME PAGE: http://sites.google.com/site/mariassuntagiannetti/Home

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

Yeejin Jang

UNSW Australia Business School, School of Banking and Finance ( email )

Sydney, NSW 2052
Australia

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