Sources of Contagion Finance or Trade?

28 Pages Posted: 15 Feb 2006

See all articles by Caroline Van Rijckeghem

Caroline Van Rijckeghem

Istanbul Analytics

Beatrice Weder di Mauro

Graduate Institute Geneva, IHEID; Graduate Institute Geneva, IHEID

Date Written: October 1999


This paper presents evidence that spillovers through bank lending, as opposed to trade linkages and country characteristics, can help explain contagion. We construct a measure of competition for bank funds and find evidence in favor of a common lender effect in the Mexican, Thai, and Russian crises, after controlling for macroeconomic fundamentals. The results are quite robust to the definition of the finance indicator. In the case of the Asian crisis, results are not always robust to the inclusion of trade competition, reflecting the high correlation between competition for funds and trade.

Keywords: Contagion currency crisis financial spillovers

JEL Classification: F30 F32 F34

Suggested Citation

Van Rijckeghem, Caroline and Weder di Mauro, Beatrice and Weder di Mauro, Beatrice, Sources of Contagion Finance or Trade? (October 1999). IMF Working Paper No. 99/146, Available at SSRN:

Caroline Van Rijckeghem (Contact Author)

Istanbul Analytics ( email )


Beatrice Weder di Mauro

Graduate Institute Geneva, IHEID ( email )

Geneva Avenue de la Paix 11A
Geneva, 1202
1211 (Fax)

Graduate Institute Geneva, IHEID ( email )

Chemin Eugene Rigot 2
Geneva, 1211

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