Staff Reports
When Is U.S. Bank Lending to Emerging Markets Volatile?
March 2001 Number 119
JEL classification: F3, F4, G0

Author: Linda S. Goldberg

Using bank-specific data on U.S. bank claims on individual foreign countries since the mid-1980s, this paper 1)characterizes the size and portfolio diversification patterns of the U.S. banks engaging in foreign lending, and 2)econometrically explores the determinants of fluctuations in U.S. bank claims on a broad set of countries. U.S. bank claims on Latin American and Asian emerging markets, and on industrialized countries, are sensitive to U.S. macroeconomic conditions. When the United States grows rapidly, there is substitution between claims on industrialized countries and claims on the United States. The pattern of response of claims on emerging markets to U.S. conditions differs across banks of different sizes and across emerging market regions. Moreover, we find that, unlike U.S. bank claims on industrialized countries, claims on emerging markets are not highly sensitive to local country GDP and interest rates.

Available only in PDFPDF27 pages / 224 kb

For a published version of this report, see Linda Goldberg, "When is U.S. Bank Lending to Emerging Markets Volatile?" in Jeffrey Frankel and Sebastian Edwards, eds., Preventing Currency Crises in Emerging Markets. NBER Currency Crisis Prevention Volume (Chicago: University of Chicago, 2002).
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