ABSTRACT
This chapter presents a number of stylized facts on the relevant cross-border lending. It extends limited works on the cross-border lending to East Asian economies, such as Siregar and Choy, by focussing on the periods before and after the sub-prime financial crisis. Prior to the latest financial crisis, the primary mandate for most central banks in Asia was monetary policy stability in particular, price stability. The chapter examines the role of international bank claims, in particular, cross-border lending, as a critical channel of transmission of worldwide financial shocks to local economies. The increasing interconnectedness of domestic banking liquidity to the global funding environment enhances the links between domestic financial stability and external shocks. The exposure and home country fundamental variables have been found to be significant factors, and confirmed the role of international bank lending as a channel of shock transmission from home countries to host economies.
