International Shock Transmission after the Lehman Brothers Collapse: Evidence from Syndicated Lending

American Economic Review Papers & Proceedings, 102(3): 231–237, May 2012

7 Pages Posted: 18 Jan 2012 Last revised: 5 Jul 2012

See all articles by Ralph De Haas

Ralph De Haas

European Bank for Reconstruction and Development; Centre for Economic Policy Research (CEPR); Tilburg University - Department of Finance

Neeltje van Horen

Bank of England; Centre for Economic Policy Research (CEPR)

Date Written: May 17, 2012

Abstract

After Lehman Brothers filed for bankruptcy in September 2008, cross-border bank lending contracted sharply. To explain the severity and variation in this contraction, we analyze detailed data on cross-border syndicated lending by 75 banks to 59 countries. We find that banks that had to write down sub-prime assets, refinance large amounts of long-term debt, and experienced sharp declines in their market-to-book ratio, transmitted these shocks across borders by curtailing their lending abroad. While shocked banks differentiated between countries in much the same way as less constrained banks, they restricted their lending more to small borrowers.

Keywords: cross-border lending, bank-funding shocks, crisis transmission

JEL Classification: F36, F42, F52, G15, G21, G28

Suggested Citation

De Haas, Ralph and van Horen, Neeltje, International Shock Transmission after the Lehman Brothers Collapse: Evidence from Syndicated Lending (May 17, 2012). American Economic Review Papers & Proceedings, 102(3): 231–237, May 2012, Available at SSRN: https://ssrn.com/abstract=1986749

Ralph De Haas (Contact Author)

European Bank for Reconstruction and Development ( email )

One Exchange Square
London, EC2A 2JN
United Kingdom

HOME PAGE: www.ebrd.com

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Neeltje Van Horen

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

HOME PAGE: http://https://www.bankofengland.co.uk/research/Researchers/neeltje-van-horen

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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