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Global Bank Lending Flows: Identifying the Flight Home Effect

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  • Weder di Mauro, Beatrice
  • Van Rijckeghem, Caroline

Abstract

We propose a general specification to estimate the strength of the flight home effect, provide a decomposition into lender and recipient effects and country-by country measures. Flight home occurs when the change in domestic credit extended by domestic banks cannot be accounted for by recipient or lender effects. Based on break-adjusted BIS data, we find evidence of flight home for almost all banking systems with the notable exception of Canada, the US and Japan. In periods of relative calm, reversals of the home bias are small. The result is cumulative renationalization of bank lending.

Suggested Citation

  • Weder di Mauro, Beatrice & Van Rijckeghem, Caroline, 2014. "Global Bank Lending Flows: Identifying the Flight Home Effect," CEPR Discussion Papers 10139, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:10139
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    References listed on IDEAS

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    1. Giannetti, Mariassunta & Laeven, Luc, 2012. "The flight home effect: Evidence from the syndicated loan market during financial crises," Journal of Financial Economics, Elsevier, vol. 104(1), pages 23-43.
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    13. Mr. Eugenio M Cerutti, 2013. "Banks’ Foreign Credit Exposures and Borrowers’ Rollover Risks Measurement, Evolution and Determinants," IMF Working Papers 2013/009, International Monetary Fund.
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    Cited by:

    1. Eugenio Cerutti & Stijn Claessens, 2017. "The Great Cross-Border Bank Deleveraging: Supply Constraints and Intra-Group Frictions," Review of Finance, European Finance Association, vol. 21(1), pages 201-236.
    2. Stijn Claessens, 2017. "Global Banking: Recent Developments and Insights from Research," Review of Finance, European Finance Association, vol. 21(4), pages 1513-1555.
    3. Bekaert, Geert & Mehl, Arnaud, 2019. "On the global financial market integration “swoosh” and the trilemma," Journal of International Money and Finance, Elsevier, vol. 94(C), pages 227-245.
    4. repec:oup:rfinst:v:21:y:2017:i:4:p:1513-1555. is not listed on IDEAS

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    More about this item

    Keywords

    Deglobalization; Financial protectionism; International banking system;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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