International Banking Amidst COVID-19: Resilience and Drivers
11 Pages Posted: 11 Dec 2020
Date Written: December 7, 2020
The claims of international banks held up well during the COVID-19 crisis, although economic output fell by even more than during the Great Financial Crisis (GFC). Both cross-border and local claims were resilient, in advanced and emerging market economies alike. Looking at lending to the real economy, we examine how borrower and lender characteristics relate to the growth of claims on the private non-financial sector during the pandemic. We find that countries with stronger economic activity and smaller financial vulnerabilities borrowed more. Likewise, better capitalised banking systems lent more. The economic stress also led advanced economy borrowers to draw on pre-existing credit lines from foreign banks.
JEL Classification: F34, G01, G21
Suggested Citation: Suggested Citation