International financial stress spillovers to bank lending: Do internal characteristics matter?

Transmission of the Global Bank Liquidity Shock: Evidence from the US Foreign Bank Loans to Southeast Asian Economies

“…We instrumented each possible coefficient of determination with a suitable lag to lessen the endogeneity influence on the model. The results of using other dynamic models (pooled OLS and fixed effect) typically lead to an estimated bias; the fixed effect model's bias was downward, and the OLS autoregressive coefficient had an upward bias (D'Avino, 2018; Haddou, 2022;Takáts & Temesvary, 2020). Typically, Arrelano-Bond estimation utilizes a large dataset to offer a bias-free result with the assumption that the cost of the coefficient would fall between OLS and fixed effect estimations.…”

“…In any other case, simultaneous financial sector deregulation in emerging nations supports bank reform in wealthy nations. Financial institutions in emerging market nations began switching from local to external support as a capital source (Abbassi et al, 2022;Haddou, 2022;Takáts & Temesvary, 2020). By lowering their monetary entrance barriers, emerging market nations gave up their command over international bank capital flow.…”

“…The prior studies, which have used a variety of tools, look at how the global financial meltdown spread from industrialized to developing countries through the foreign bank lending channel. They offered many genres of writing that segmented the characteristics within the native country's (push) and host country's (pull) factors (Abbassi et al, 2022;Albrizio et al, 2020;Avdjiev et al, 2020;Barrell & Nahhas, 2020;Choi et al, 2021;Choi & Furceri, 2019;Haddou, 2022;Shareef & Prabheesh, 2020). The study by Abbassi et al (2022), Choi and Furceri (2019), Haddou (2022), and Shareef and Prabheesh (2020) provide a lender-side analysis, revealing that decrease in the home countries' economy reduces overseas bank loans.…”

“…They offered many genres of writing that segmented the characteristics within the native country's (push) and host country's (pull) factors (Abbassi et al, 2022;Albrizio et al, 2020;Avdjiev et al, 2020;Barrell & Nahhas, 2020;Choi et al, 2021;Choi & Furceri, 2019;Haddou, 2022;Shareef & Prabheesh, 2020). The study by Abbassi et al (2022), Choi and Furceri (2019), Haddou (2022), and Shareef and Prabheesh (2020) provide a lender-side analysis, revealing that decrease in the home countries' economy reduces overseas bank loans. With the same perspective of lender's point of view, Albrizio et al (2020), Avdjiev et al (2020), andChoi et al (2021) show a similar decrease in home lending due to a more tightening monetary policy in host countries as a borrower.…”

“…With the same perspective of lender's point of view, Albrizio et al (2020), Avdjiev et al (2020), andChoi et al (2021) show a similar decrease in home lending due to a more tightening monetary policy in host countries as a borrower. Based on the opposite perspective, Barrell and Nahhas (2020) and Haddou (2022) provide a shred of evidence that borrower countries' conditions, such as business cycle and rate of return, improve cross-border lending attraction. However, most previous studies provide the volatility impact of currency rates as one of the avenues that attract international bank loans in developing economies.…”