ABSTRACT
Global banks played a significant role in the transmission of the current crisis to emerging-market economies, because the U.S. liquidity shocks to developed-country banking have reduced lending in local markets through contractions in cross-border lending to banks and private agents and also through contractions in parent banks' support of foreign affiliates (Cetorelli and Goldberg 2009). As banks are more globalized, their lending activities are affected by shocks across countries. How are shocks transmitted? What are the determinants of global banks' lending in the emerging markets? Does foreign banks' lending stabilize or destabilize credit supply in the emerging market?
