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The determinants of global bank lending: Evidence from bilateral cross-country data
Institution:1. University of Central Florida, Orlando, FL, United States;2. Fordham University, Bronx, NY, United States;1. Cranfield School of Management, Cranfield University, Cranfield MK43 0AL, UK;2. The Sir John Cass Business School, City University, London, UK;3. Surrey Business School, University of Surrey, Guildford GU2 7XH, UK;1. School of Finance, Nankai University, 38 Tongyan Road, Jinnan District, Tianjin 300350, China;2. Department of Finance, National Kaohsiung First University of Science and Technology, Kaohsiung, Taiwan;3. Risk and Insurance Research Center, College of Commerce, National Chengchi University, Taiwan;4. Department of Statistics and Actuarial Science, University of Waterloo, 200 University Avenue West, Waterloo N2L 3G1, ON, Canada;1. Faculty of Economics, Federal University of Bahia, R. Barão de Jeremoabo, 668-1154 Ondina, Salvador, BA 40170-115, Brazil;2. Department of Finance, WHU – Otto Beisheim School of Management, 56179 Vallendar, Germany;3. School of Economics and Management, Leibniz University Hannover, Koenigsworther Platz 1, 30167 Hannover, Germany;4. The Boston Consulting Group GmbH, Ludwigstrasse 21, 80539 München, Germany;5. ICMA Centre, Henley Business School, University of Reading, Reading, RG6 6BA, UK;1. Warrington College of Business Administration, University of Florida, Gainesville, FL, 32611, United States;2. Blackthorne Group, Tallahassee, FL, United States
Abstract:This paper finds that factors determined outside of a country, at the quarterly frequency and especially after 2008, are more closely related to the global bank loans it receives. These loans are generally more stable when global banks face more competition and have a higher presence in the recipient country. We obtain our results by using bilateral lending data from 15 countries and a unique methodology to identify and compare the independent effects of external and internal factors. We identify theoretical mechanisms that can explain our empirical findings and draw more detailed inferences for competition and global bank presence by solving a simple model of global banking.
Keywords:Cross-country loans  Global banks  Competition  Overlapping generations model
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