Channels of Transmission of the 2007/09 Global Crisis to International Bank Lending in Developing Countries

During a financial crisis, credit provision by international banks may be stymied by three distinct, but related, channels: changes in lending standards as a result of increased economic uncertainty, changes in funding availability from interbank l...

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Main Authors:	Adams-Kane, Jonathon, Jia, Yueqing, Lim, Jamus Jerome
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ACCELERATOR ACCESS TO CREDIT ACCOUNTING AFFILIATES AGRICULTURE AIC ALLOCATION OF CREDIT ASSET HOLDINGS ASSET MARKETS ASSET PRICE ASSET PRICES AUCTION AVAILABILITY OF CREDIT BALANCE SHEET BALANCE-SHEET BANK ACTIVITY BANK BALANCE SHEET BANK BALANCE SHEETS BANK BEHAVIOR BANK BONDS BANK CREDIT BANK LIQUIDITY BANK LOAN BANK LOANS BANK ORIGIN BANKING ASSETS BANKING SECTOR BANKRUPTCY BENCHMARK BID BINDING CONSTRAINT BORROWER BORROWING BORROWING COSTS BORROWINGS CAPITAL MARKETS CD CDS CENTRAL BANK CENTRAL BANKS CERTIFICATE OF DEPOSIT CERTIFICATES OF DEPOSIT CHANNELS OF CREDIT CHECKS COMMERCIAL CREDIT COMMERCIAL LOAN COMMERCIAL LOAN MARKET COMMERCIAL PAPER COMPARATIVE ECONOMICS CORPORATE INVESTMENT COST OF CAPITAL COUPON COUPON PAYMENTS CREDIT ACCESS CREDIT ALLOCATION CREDIT AVAILABILITY CREDIT CRUNCH CREDIT DEFAULT CREDIT DEFAULT SWAP CREDIT DEFAULT SWAPS CREDIT LINES CREDIT MARKET CREDIT MARKETS CREDIT PROVISION CREDIT RATIONING CREDIT RISK CREDIT WORTHINESS CREDITWORTHY BORROWERS CRISIS LENDING CURRENCY CURRENCY CRISES DEBT DEBT CRISIS DEBT OBLIGATIONS DEGREE OF LIQUIDITY DEGREE OF RISK DEMAND-SIDE FACTORS DEPENDENCY RATIO DEPENDENT DEPOSITS DERIVATIVE DERIVATIVES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DIVIDEND DOMESTIC BANK DOMESTIC BANKS DOMESTIC CREDIT ECONOMIC POLICY ECONOMIC RESEARCH ELASTICITY EMERGING ECONOMIES EMERGING MARKET EMERGING MARKETS EUROPEAN CENTRAL BANK EXCHANGE RATE EXCHANGE RATES EXPECTED VALUE EXTERNAL FINANCE FEDERAL RESERVE FINANCIAL CONTAGION FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DATA FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SHOCKS FINANCIAL STABILITY FINANCIAL STRESS FINANCIAL SUPPORT FIXED RATE FLOW OF CREDIT FOREIGN BANK FOREIGN BANK ENTRY FOREIGN BANK PARTICIPATION FOREIGN BANK PENETRATION FOREIGN BANKS FOREIGN CLAIMS FOREIGN CURRENCIES FOREIGN EXCHANGE FOREIGN LENDERS FUTURE RESEARCH GDP GLOBAL BANKING GROSS DOMESTIC PRODUCT HOST COUNTRY HOST ECONOMIES HOST ECONOMY IMPLIED VOLATILITY INCOME INFLATION INFLATION RATE INFLATION RATES INFORMATIONAL ASYMMETRIES INSTRUMENT INTERBANK MARKETS INTEREST RATE INTEREST RATE SPREADS INTEREST RATES INTERNAL FINANCING INTERNAL FUNDS INTERNATIONAL BANK INTERNATIONAL BANK LENDING INTERNATIONAL BANKING INTERNATIONAL BANKS INTERNATIONAL INVESTORS INTERNATIONAL LENDING INVESTMENT VEHICLES LARGE FIRMS LENDERS LIQUID ASSETS LIQUIDITY LIQUIDITY CONSTRAINT LIQUIDITY CONSTRAINTS LIQUIDITY MANAGEMENT LIQUIDITY PROBLEMS LIQUIDITY RISK LOAN ASSETS LOAN DEMAND LOAN MARKET LOAN OFFICER LOAN OFFICERS LOAN PRINCIPAL LOANABLE FUNDS LOCAL BANKS LOCAL CURRENCY MACROECONOMICS MARGINAL VALUE MARKET CONDITIONS MARKET LIQUIDITY MARKET PARTICIPANTS MONETARY POLICY MONETARY SHOCKS MONEY MARKET MORTGAGE MORTGAGE CREDIT MORTGAGE-BACKED SECURITIES NATIONAL SAVING NET WORTH NEW CREDIT OPEN ECONOMIES OPPORTUNITY COST OUTSTANDING LOANS POLICY ENVIRONMENT POLICY RESPONSE PORTFOLIO PORTFOLIOS POSITIVE COEFFICIENT PRICE INDEXES PRICE VOLATILITY PRIMARY MARKETS RATE OF RETURN REAL GROSS DOMESTIC PRODUCT REAL INTEREST REAL INTEREST RATES RECESSION RETURNS RISK AVERSION RISK EXPOSURE SECURITIES MARKET SHORT-TERM LIQUIDITY SMALL BUSINESS SMALL BUSINESSES SOLVENCY SOLVENCY PROBLEMS SOVEREIGN DEBT STOCK MARKET SUPPLY OF CREDIT SWAP TRANSMISSION OF MONETARY POLICY UNSECURED LOANS UTILITY FUNCTION VALUATION VALUATIONS WEALTH
Online Access:	http://documents.worldbank.org/curated/en/2012/03/15967985/channels-transmission-200709-global-crisis-international-bank-lending-developing-countries http://hdl.handle.net/10986/19870

id	okr-10986-19870
recordtype	oai_dc
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ACCELERATOR ACCESS TO CREDIT ACCOUNTING AFFILIATES AGRICULTURE AIC ALLOCATION OF CREDIT ASSET HOLDINGS ASSET MARKETS ASSET PRICE ASSET PRICES AUCTION AVAILABILITY OF CREDIT BALANCE SHEET BALANCE-SHEET BANK ACTIVITY BANK BALANCE SHEET BANK BALANCE SHEETS BANK BEHAVIOR BANK BONDS BANK CREDIT BANK LIQUIDITY BANK LOAN BANK LOANS BANK ORIGIN BANKING ASSETS BANKING SECTOR BANKRUPTCY BENCHMARK BID BINDING CONSTRAINT BORROWER BORROWING BORROWING COSTS BORROWINGS CAPITAL MARKETS CD CDS CENTRAL BANK CENTRAL BANKS CERTIFICATE OF DEPOSIT CERTIFICATES OF DEPOSIT CHANNELS OF CREDIT CHECKS COMMERCIAL CREDIT COMMERCIAL LOAN COMMERCIAL LOAN MARKET COMMERCIAL PAPER COMPARATIVE ECONOMICS CORPORATE INVESTMENT COST OF CAPITAL COUPON COUPON PAYMENTS CREDIT ACCESS CREDIT ALLOCATION CREDIT AVAILABILITY CREDIT CRUNCH CREDIT DEFAULT CREDIT DEFAULT SWAP CREDIT DEFAULT SWAPS CREDIT LINES CREDIT MARKET CREDIT MARKETS CREDIT PROVISION CREDIT RATIONING CREDIT RISK CREDIT WORTHINESS CREDITWORTHY BORROWERS CRISIS LENDING CURRENCY CURRENCY CRISES DEBT DEBT CRISIS DEBT OBLIGATIONS DEGREE OF LIQUIDITY DEGREE OF RISK DEMAND-SIDE FACTORS DEPENDENCY RATIO DEPENDENT DEPOSITS DERIVATIVE DERIVATIVES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DIVIDEND DOMESTIC BANK DOMESTIC BANKS DOMESTIC CREDIT ECONOMIC POLICY ECONOMIC RESEARCH ELASTICITY EMERGING ECONOMIES EMERGING MARKET EMERGING MARKETS EUROPEAN CENTRAL BANK EXCHANGE RATE EXCHANGE RATES EXPECTED VALUE EXTERNAL FINANCE FEDERAL RESERVE FINANCIAL CONTAGION FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DATA FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SHOCKS FINANCIAL STABILITY FINANCIAL STRESS FINANCIAL SUPPORT FIXED RATE FLOW OF CREDIT FOREIGN BANK FOREIGN BANK ENTRY FOREIGN BANK PARTICIPATION FOREIGN BANK PENETRATION FOREIGN BANKS FOREIGN CLAIMS FOREIGN CURRENCIES FOREIGN EXCHANGE FOREIGN LENDERS FUTURE RESEARCH GDP GLOBAL BANKING GROSS DOMESTIC PRODUCT HOST COUNTRY HOST ECONOMIES HOST ECONOMY IMPLIED VOLATILITY INCOME INFLATION INFLATION RATE INFLATION RATES INFORMATIONAL ASYMMETRIES INSTRUMENT INTERBANK MARKETS INTEREST RATE INTEREST RATE SPREADS INTEREST RATES INTERNAL FINANCING INTERNAL FUNDS INTERNATIONAL BANK INTERNATIONAL BANK LENDING INTERNATIONAL BANKING INTERNATIONAL BANKS INTERNATIONAL INVESTORS INTERNATIONAL LENDING INVESTMENT VEHICLES LARGE FIRMS LENDERS LIQUID ASSETS LIQUIDITY LIQUIDITY CONSTRAINT LIQUIDITY CONSTRAINTS LIQUIDITY MANAGEMENT LIQUIDITY PROBLEMS LIQUIDITY RISK LOAN ASSETS LOAN DEMAND LOAN MARKET LOAN OFFICER LOAN OFFICERS LOAN PRINCIPAL LOANABLE FUNDS LOCAL BANKS LOCAL CURRENCY MACROECONOMICS MARGINAL VALUE MARKET CONDITIONS MARKET LIQUIDITY MARKET PARTICIPANTS MONETARY POLICY MONETARY SHOCKS MONEY MARKET MORTGAGE MORTGAGE CREDIT MORTGAGE-BACKED SECURITIES NATIONAL SAVING NET WORTH NEW CREDIT OPEN ECONOMIES OPPORTUNITY COST OUTSTANDING LOANS POLICY ENVIRONMENT POLICY RESPONSE PORTFOLIO PORTFOLIOS POSITIVE COEFFICIENT PRICE INDEXES PRICE VOLATILITY PRIMARY MARKETS RATE OF RETURN REAL GROSS DOMESTIC PRODUCT REAL INTEREST REAL INTEREST RATES RECESSION RETURNS RISK AVERSION RISK EXPOSURE SECURITIES MARKET SHORT-TERM LIQUIDITY SMALL BUSINESS SMALL BUSINESSES SOLVENCY SOLVENCY PROBLEMS SOVEREIGN DEBT STOCK MARKET SUPPLY OF CREDIT SWAP TRANSMISSION OF MONETARY POLICY UNSECURED LOANS UTILITY FUNCTION VALUATION VALUATIONS WEALTH
spellingShingle	ACCELERATOR ACCESS TO CREDIT ACCOUNTING AFFILIATES AGRICULTURE AIC ALLOCATION OF CREDIT ASSET HOLDINGS ASSET MARKETS ASSET PRICE ASSET PRICES AUCTION AVAILABILITY OF CREDIT BALANCE SHEET BALANCE-SHEET BANK ACTIVITY BANK BALANCE SHEET BANK BALANCE SHEETS BANK BEHAVIOR BANK BONDS BANK CREDIT BANK LIQUIDITY BANK LOAN BANK LOANS BANK ORIGIN BANKING ASSETS BANKING SECTOR BANKRUPTCY BENCHMARK BID BINDING CONSTRAINT BORROWER BORROWING BORROWING COSTS BORROWINGS CAPITAL MARKETS CD CDS CENTRAL BANK CENTRAL BANKS CERTIFICATE OF DEPOSIT CERTIFICATES OF DEPOSIT CHANNELS OF CREDIT CHECKS COMMERCIAL CREDIT COMMERCIAL LOAN COMMERCIAL LOAN MARKET COMMERCIAL PAPER COMPARATIVE ECONOMICS CORPORATE INVESTMENT COST OF CAPITAL COUPON COUPON PAYMENTS CREDIT ACCESS CREDIT ALLOCATION CREDIT AVAILABILITY CREDIT CRUNCH CREDIT DEFAULT CREDIT DEFAULT SWAP CREDIT DEFAULT SWAPS CREDIT LINES CREDIT MARKET CREDIT MARKETS CREDIT PROVISION CREDIT RATIONING CREDIT RISK CREDIT WORTHINESS CREDITWORTHY BORROWERS CRISIS LENDING CURRENCY CURRENCY CRISES DEBT DEBT CRISIS DEBT OBLIGATIONS DEGREE OF LIQUIDITY DEGREE OF RISK DEMAND-SIDE FACTORS DEPENDENCY RATIO DEPENDENT DEPOSITS DERIVATIVE DERIVATIVES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DIVIDEND DOMESTIC BANK DOMESTIC BANKS DOMESTIC CREDIT ECONOMIC POLICY ECONOMIC RESEARCH ELASTICITY EMERGING ECONOMIES EMERGING MARKET EMERGING MARKETS EUROPEAN CENTRAL BANK EXCHANGE RATE EXCHANGE RATES EXPECTED VALUE EXTERNAL FINANCE FEDERAL RESERVE FINANCIAL CONTAGION FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DATA FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SHOCKS FINANCIAL STABILITY FINANCIAL STRESS FINANCIAL SUPPORT FIXED RATE FLOW OF CREDIT FOREIGN BANK FOREIGN BANK ENTRY FOREIGN BANK PARTICIPATION FOREIGN BANK PENETRATION FOREIGN BANKS FOREIGN CLAIMS FOREIGN CURRENCIES FOREIGN EXCHANGE FOREIGN LENDERS FUTURE RESEARCH GDP GLOBAL BANKING GROSS DOMESTIC PRODUCT HOST COUNTRY HOST ECONOMIES HOST ECONOMY IMPLIED VOLATILITY INCOME INFLATION INFLATION RATE INFLATION RATES INFORMATIONAL ASYMMETRIES INSTRUMENT INTERBANK MARKETS INTEREST RATE INTEREST RATE SPREADS INTEREST RATES INTERNAL FINANCING INTERNAL FUNDS INTERNATIONAL BANK INTERNATIONAL BANK LENDING INTERNATIONAL BANKING INTERNATIONAL BANKS INTERNATIONAL INVESTORS INTERNATIONAL LENDING INVESTMENT VEHICLES LARGE FIRMS LENDERS LIQUID ASSETS LIQUIDITY LIQUIDITY CONSTRAINT LIQUIDITY CONSTRAINTS LIQUIDITY MANAGEMENT LIQUIDITY PROBLEMS LIQUIDITY RISK LOAN ASSETS LOAN DEMAND LOAN MARKET LOAN OFFICER LOAN OFFICERS LOAN PRINCIPAL LOANABLE FUNDS LOCAL BANKS LOCAL CURRENCY MACROECONOMICS MARGINAL VALUE MARKET CONDITIONS MARKET LIQUIDITY MARKET PARTICIPANTS MONETARY POLICY MONETARY SHOCKS MONEY MARKET MORTGAGE MORTGAGE CREDIT MORTGAGE-BACKED SECURITIES NATIONAL SAVING NET WORTH NEW CREDIT OPEN ECONOMIES OPPORTUNITY COST OUTSTANDING LOANS POLICY ENVIRONMENT POLICY RESPONSE PORTFOLIO PORTFOLIOS POSITIVE COEFFICIENT PRICE INDEXES PRICE VOLATILITY PRIMARY MARKETS RATE OF RETURN REAL GROSS DOMESTIC PRODUCT REAL INTEREST REAL INTEREST RATES RECESSION RETURNS RISK AVERSION RISK EXPOSURE SECURITIES MARKET SHORT-TERM LIQUIDITY SMALL BUSINESS SMALL BUSINESSES SOLVENCY SOLVENCY PROBLEMS SOVEREIGN DEBT STOCK MARKET SUPPLY OF CREDIT SWAP TRANSMISSION OF MONETARY POLICY UNSECURED LOANS UTILITY FUNCTION VALUATION VALUATIONS WEALTH Adams-Kane, Jonathon Jia, Yueqing Lim, Jamus Jerome Channels of Transmission of the 2007/09 Global Crisis to International Bank Lending in Developing Countries
relation	Policy Research Working Paper;No. 6011
description	During a financial crisis, credit provision by international banks may be stymied by three distinct, but related, channels: changes in lending standards as a result of increased economic uncertainty, changes in funding availability from interbank liquidity markets, and changes in solvency due to effects on bank balance sheets. This paper illuminates the manner by which each of these channels independently operated to affect developed-country bank lending in developing countries during the global financial crisis of 2007/09. It quantifies how changes in banks' uncertainty about the value of their asset holdings, access to interbank liquidity, and internal balance sheet considerations altered their supply of credit in the run-up, during, and in the immediate aftermath of the financial crisis, both in terms of their relative magnitudes, as well as the sensitivity of these magnitudes to the crisis.
format	Publications & Research :: Policy Research Working Paper
author	Adams-Kane, Jonathon Jia, Yueqing Lim, Jamus Jerome
author_facet	Adams-Kane, Jonathon Jia, Yueqing Lim, Jamus Jerome
author_sort	Adams-Kane, Jonathon
title	Channels of Transmission of the 2007/09 Global Crisis to International Bank Lending in Developing Countries
title_short	Channels of Transmission of the 2007/09 Global Crisis to International Bank Lending in Developing Countries
title_full	Channels of Transmission of the 2007/09 Global Crisis to International Bank Lending in Developing Countries
title_fullStr	Channels of Transmission of the 2007/09 Global Crisis to International Bank Lending in Developing Countries
title_full_unstemmed	Channels of Transmission of the 2007/09 Global Crisis to International Bank Lending in Developing Countries
title_sort	channels of transmission of the 2007/09 global crisis to international bank lending in developing countries
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2012/03/15967985/channels-transmission-200709-global-crisis-international-bank-lending-developing-countries http://hdl.handle.net/10986/19870
_version_	1764443983813017600
spelling	okr-10986-198702021-04-23T14:03:52Z Channels of Transmission of the 2007/09 Global Crisis to International Bank Lending in Developing Countries Adams-Kane, Jonathon Jia, Yueqing Lim, Jamus Jerome ACCELERATOR ACCESS TO CREDIT ACCOUNTING AFFILIATES AGRICULTURE AIC ALLOCATION OF CREDIT ASSET HOLDINGS ASSET MARKETS ASSET PRICE ASSET PRICES AUCTION AVAILABILITY OF CREDIT BALANCE SHEET BALANCE-SHEET BANK ACTIVITY BANK BALANCE SHEET BANK BALANCE SHEETS BANK BEHAVIOR BANK BONDS BANK CREDIT BANK LIQUIDITY BANK LOAN BANK LOANS BANK ORIGIN BANKING ASSETS BANKING SECTOR BANKRUPTCY BENCHMARK BID BINDING CONSTRAINT BORROWER BORROWING BORROWING COSTS BORROWINGS CAPITAL MARKETS CD CDS CENTRAL BANK CENTRAL BANKS CERTIFICATE OF DEPOSIT CERTIFICATES OF DEPOSIT CHANNELS OF CREDIT CHECKS COMMERCIAL CREDIT COMMERCIAL LOAN COMMERCIAL LOAN MARKET COMMERCIAL PAPER COMPARATIVE ECONOMICS CORPORATE INVESTMENT COST OF CAPITAL COUPON COUPON PAYMENTS CREDIT ACCESS CREDIT ALLOCATION CREDIT AVAILABILITY CREDIT CRUNCH CREDIT DEFAULT CREDIT DEFAULT SWAP CREDIT DEFAULT SWAPS CREDIT LINES CREDIT MARKET CREDIT MARKETS CREDIT PROVISION CREDIT RATIONING CREDIT RISK CREDIT WORTHINESS CREDITWORTHY BORROWERS CRISIS LENDING CURRENCY CURRENCY CRISES DEBT DEBT CRISIS DEBT OBLIGATIONS DEGREE OF LIQUIDITY DEGREE OF RISK DEMAND-SIDE FACTORS DEPENDENCY RATIO DEPENDENT DEPOSITS DERIVATIVE DERIVATIVES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DIVIDEND DOMESTIC BANK DOMESTIC BANKS DOMESTIC CREDIT ECONOMIC POLICY ECONOMIC RESEARCH ELASTICITY EMERGING ECONOMIES EMERGING MARKET EMERGING MARKETS EUROPEAN CENTRAL BANK EXCHANGE RATE EXCHANGE RATES EXPECTED VALUE EXTERNAL FINANCE FEDERAL RESERVE FINANCIAL CONTAGION FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DATA FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SHOCKS FINANCIAL STABILITY FINANCIAL STRESS FINANCIAL SUPPORT FIXED RATE FLOW OF CREDIT FOREIGN BANK FOREIGN BANK ENTRY FOREIGN BANK PARTICIPATION FOREIGN BANK PENETRATION FOREIGN BANKS FOREIGN CLAIMS FOREIGN CURRENCIES FOREIGN EXCHANGE FOREIGN LENDERS FUTURE RESEARCH GDP GLOBAL BANKING GROSS DOMESTIC PRODUCT HOST COUNTRY HOST ECONOMIES HOST ECONOMY IMPLIED VOLATILITY INCOME INFLATION INFLATION RATE INFLATION RATES INFORMATIONAL ASYMMETRIES INSTRUMENT INTERBANK MARKETS INTEREST RATE INTEREST RATE SPREADS INTEREST RATES INTERNAL FINANCING INTERNAL FUNDS INTERNATIONAL BANK INTERNATIONAL BANK LENDING INTERNATIONAL BANKING INTERNATIONAL BANKS INTERNATIONAL INVESTORS INTERNATIONAL LENDING INVESTMENT VEHICLES LARGE FIRMS LENDERS LIQUID ASSETS LIQUIDITY LIQUIDITY CONSTRAINT LIQUIDITY CONSTRAINTS LIQUIDITY MANAGEMENT LIQUIDITY PROBLEMS LIQUIDITY RISK LOAN ASSETS LOAN DEMAND LOAN MARKET LOAN OFFICER LOAN OFFICERS LOAN PRINCIPAL LOANABLE FUNDS LOCAL BANKS LOCAL CURRENCY MACROECONOMICS MARGINAL VALUE MARKET CONDITIONS MARKET LIQUIDITY MARKET PARTICIPANTS MONETARY POLICY MONETARY SHOCKS MONEY MARKET MORTGAGE MORTGAGE CREDIT MORTGAGE-BACKED SECURITIES NATIONAL SAVING NET WORTH NEW CREDIT OPEN ECONOMIES OPPORTUNITY COST OUTSTANDING LOANS POLICY ENVIRONMENT POLICY RESPONSE PORTFOLIO PORTFOLIOS POSITIVE COEFFICIENT PRICE INDEXES PRICE VOLATILITY PRIMARY MARKETS RATE OF RETURN REAL GROSS DOMESTIC PRODUCT REAL INTEREST REAL INTEREST RATES RECESSION RETURNS RISK AVERSION RISK EXPOSURE SECURITIES MARKET SHORT-TERM LIQUIDITY SMALL BUSINESS SMALL BUSINESSES SOLVENCY SOLVENCY PROBLEMS SOVEREIGN DEBT STOCK MARKET SUPPLY OF CREDIT SWAP TRANSMISSION OF MONETARY POLICY UNSECURED LOANS UTILITY FUNCTION VALUATION VALUATIONS WEALTH During a financial crisis, credit provision by international banks may be stymied by three distinct, but related, channels: changes in lending standards as a result of increased economic uncertainty, changes in funding availability from interbank liquidity markets, and changes in solvency due to effects on bank balance sheets. This paper illuminates the manner by which each of these channels independently operated to affect developed-country bank lending in developing countries during the global financial crisis of 2007/09. It quantifies how changes in banks' uncertainty about the value of their asset holdings, access to interbank liquidity, and internal balance sheet considerations altered their supply of credit in the run-up, during, and in the immediate aftermath of the financial crisis, both in terms of their relative magnitudes, as well as the sensitivity of these magnitudes to the crisis. 2014-08-29T18:12:05Z 2014-08-29T18:12:05Z 2012-03 http://documents.worldbank.org/curated/en/2012/03/15967985/channels-transmission-200709-global-crisis-international-bank-lending-developing-countries http://hdl.handle.net/10986/19870 English en_US Policy Research Working Paper;No. 6011 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research

Channels of Transmission of the 2007/09 Global Crisis to International Bank Lending in Developing Countries

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