Foreign banks and international transmission of monetary policy: Evidence from the syndicated loan market

Asli Demirguc-Kunt, B.L. Horváth, Harry Huizinga

Research output: Contribution to journalArticleScientificpeer-review

Abstract

This paper examines how the sensitivity of cross-border syndicated loan supply varies with the internationalization of borrower country banking sectors, banks and loan syndicates. A higher foreign bank presence in borrower countries mitigates the transmission of monetary policy. Prior lending experience of international banks in borrower countries also attenuates monetary transmission. In contrast, to the extent they become more international, the credit supply of banks and loan syndicates becomes more sensitive to lender-country monetary policy.
Original languageEnglish
Article number103542
JournalEuropean Economic Review
Volume129
DOIs
Publication statusPublished - Oct 2020

Keywords

  • cross-border lending
  • monetary transmission
  • foreign ownership of banks

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