IMF Working Papers Volume 2018 Issue 158: Who Pays for Financial Crises? Price and Quantity Rationing of Different Borrowers by Domestic and Foreign Banks (2018)

Who Pays for Financial Crises? Price and Quantity Rationing of Different Borrowers by Domestic and Foreign Banks

Author:

Allen N. Berger

0000000404811396

https://isni.org/isni/0000000404811396 International Monetary Fund

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Tanakorn Makaew

0000000404811396

https://isni.org/isni/0000000404811396 International Monetary Fund

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, and

Ms. Rima A Turk

Ms. Rima A Turk
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https://orcid.org/0000-0001-5321-6524

Series:: IMF Working Papers

Volume/Issue:: Volume 2018: Issue 158

Language:: English

Publication Date:: 10 Jul 2018

DOI:: https://doi.org/10.5089/9781484358191.001

ISBN:: 9781484358191

ISSN:: 1018-5941

Pages:: 47

Keywords:: WP; borrower characteristic; private borrower; public borrower; loan purpose; Credit Rationing; Foreign Banks; Financial Crises; Relationship Lending; contract term; Loans; Bank credit; Credit ratings; Global

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Series:: IMF Working Papers

Volume/Issue:: Volume 2018: Issue 158

Language:: English

Publication Date:: 10 Jul 2018

DOI:: https://doi.org/10.5089/9781484358191.001

ISBN:: 9781484358191

ISSN:: 1018-5941

Pages:: 47

Keywords:: WP; borrower characteristic; private borrower; public borrower; loan purpose; Credit Rationing; Foreign Banks; Financial Crises; Relationship Lending; contract term; Loans; Bank credit; Credit ratings; Global

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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Financial crises result in price and quantity rationing of otherwise creditworthy business borrowers, but little is known about the relative severity of these two types of rationing, which borrowers are rationed most, and the roles of foreign and domestic banks. Using a dataset from 50 countries containing over 18,000 business loans with information on the lender, the borrower, and contract terms, we find that publicly-listed borrowers are rationed more by prices or interest rates, whereas privately-held borrowers are rationed more by the number of loans. Also, the global financial crisis appears to have changed how banks price borrower risk. Further, there are important differences between foreign and domestic banks and between U.S. and non-U.S. loans.

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IMF Working Papers

ISSN:: 1018-5941

Publisher:: International Monetary Fund

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