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Foreign Funding Shocks and the Lending Channel: Do Foreign Banks Adjust Differently?

We document for a set of Latin American emerging countries that the different nature of foreign funding accessed by foreign and local banks affected their lending performance after September 2008. We show that lending growth was weaker for shock-affected foreign banks compared to shock-affected local banks. This evidence represents valuable policy information for regulators concerned with the stability and well-functioning of banking sectors. 

01. November 2016

Authors Felix Noth Matias Ossandon Busch

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