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dc.titleFinancial Integration and Foreign Banks in Latin America: How Do They Impact the Transmission of External Financial Shocks?
dc.contributor.authorGalindo, Arturo
dc.contributor.authorIzquierdo, Alejandro
dc.contributor.authorRojas-Suárez, Liliana
dc.contributor.orgunitDepartment of Research and Chief Economist
dc.coverageThe Caribbean
dc.coverageCentral America
dc.coverageSouth America
dc.date.available2011-02-07T00:00:00
dc.date.issue2010-02-01T00:00:00
dc.description.abstractThis paper explores the impact of international financial integration on credit markets in Latin America, using a cross-country dataset covering 17 countries between 1996 and 2008. It is found that financial integration amplifies the impact of international financial shocks on aggregate credit and interest rate fluctuations. Nonetheless, the net impact of integration on deepening credit markets dominates for the large majority of states of nature. The paper also uses a detailed bank-level dataset that covers more than 500 banks for a similar time period to explore the role of financial integrationcaptured through the participation of foreign banksin propagating external shocks. It is found that interest rates charged and loans supplied by foreign-owned banks respond more to external financial shocks than those supplied by domestically owned banks. This does not hold for all foreign banks. Spanish banks in the sample behave more like domestic banks and do not amplify the impact of foreign shocks on credit and interest rates.
dc.identifier.doihttp://dx.doi.org/10.18235/0010925
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/Financial-Integration-and-Foreign-Banks-in-Latin-America-How-Do-They-Impact-the-Transmission-of-External-Financial-Shocks.pdf
dc.language.isoen
dc.mediumAdobe PDF
dc.publisherInter-American Development Bank
dc.subjectFinancial Crisis and Structural Adjustement
dc.subjectFinancial Sector
dc.subject.jelcodeF36 - Financial Aspects of Economic Integration
dc.subject.jelcodeG0 - Financial Economics: General
dc.subject.jelcodeG00 - Financial Economics: General: General
dc.subject.jelcodeG01 - Financial Crises
dc.subject.jelcodeG21 - Banks • Depository Institutions • Micro Finance Institutions • Mortgages
dc.subject.keywordsIDB-WP-116
idb.identifier.pubnumberWorking Papers
idb.operationRG-K1089
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