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- W2163013179 abstract "In the context of the global market for syndicated bank loans, we provide evidence that the collapse of international markets during financial crises can in part be explained by a flight home effect. We show that the home bias of lenders’ loan origination increases by approximately 20 percent if the bank’s country of origin experiences a banking crisis. This flight home effect is distinct from a flight to quality effect because borrowers of different quality (or from countries with different degree of investor protection) are similarly affected by lenders rebalancing their loan portfolios in favor of domestic borrowers. Banks with less stable funding sources and larger losses, being more vulnerable to liquidity shocks, exhibit a stronger flight home effect. Overall, the results indicate that the home bias of international capital allocation tends to increase in the presence of adverse economic shocks affecting the net wealth of international investors. We provide evidence suggesting that the degree of proximity to the domestic market affects the perceived risk and expected returns of banks experiencing negative shocks." @default.
- W2163013179 created "2016-06-24" @default.
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- W2163013179 date "2011-01-01" @default.
- W2163013179 modified "2023-09-23" @default.
- W2163013179 title "The Flight Home Effect: Evidence from the Syndicated Loan Market During Financial Crises" @default.
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- W2163013179 doi "https://doi.org/10.2139/ssrn.1726050" @default.
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