Flight Home, Flight Abroad, and International Credit Cycles
- (pp. 219-24)
Abstract
This paper shows that banks exhibit a weaker (stronger) home bias in the extension of new loans when funding conditions in their home country improve (deteriorate). We refer to these changes in home bias as flight abroad and flight home effects, respectively, and show that they are unrelated to the better known flight to quality effect that arises during periods of market turmoil. Our results also indicate that global banks amplify the effect of homegrown shocks on foreign countries while they are a stabilizing factor for the supply of credit in their home countries.Citation
Giannetti, Mariassunta, and Luc Laeven. 2012. "Flight Home, Flight Abroad, and International Credit Cycles." American Economic Review, 102 (3): 219-24. DOI: 10.1257/aer.102.3.219JEL Classification
- G21 Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- E44 Financial Markets and the Macroeconomy
- F42 International Policy Coordination and Transmission
- F44 International Business Cycles