The “Common Lender Effect”: Are Banking Centers Crisis Carriers?
Abstract/Contents
- Abstract
- During the late 20th and the beginning of 21st century, a number of emerging countries, which depended on external financing, experienced a series of financial crises. The common lender effect, first proposed by Kaminsky and Reinhart (1999), asserts that a country that shares the same lender as a crisis-stricken country is more likely to also experience a financial crisis. This study adds to the literature of the common lender effect by investigating if the effect is operational despite a lack of correlation between economic fundamentals of the affected countries. The theoretical section of this paper finds that a financial shock abroad can induce investors to decrease their exposure in another country despite the lack of fundamental correlation between the two countries. By improving upon current methods proposed in Van Rijckeghem and Weder (2003) and Caramazza et al. (2004), the empirical section addresses a possible bias from endogeneity problem and provides empirical evidence in support of the common lender effect.
Description
| Type of resource | text |
|---|---|
| Date created | May 2008 |
Creators/Contributors
| Author | Takapong, Saranwut |
|---|---|
| Primary advisor | Taylor, John B. |
| Degree granting institution | Stanford University, Department of Economics |
Subjects
| Subject | Stanford Department of Economics |
|---|---|
| Subject | Financial Crisis |
| Subject | Crisis Transmission |
| Subject | Debt Financing |
| Genre | Thesis |
Bibliographic information
| Related item | |
|---|---|
| Location | https://purl.stanford.edu/bt094zk6864 |
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Preferred citation
- Preferred Citation
- Takapong, Saranwut. (2008). The “Common Lender Effect”: Are Banking Centers Crisis Carriers? . Stanford Digital Repository. Available at: https://purl.stanford.edu/bt094zk6864
Collection
Stanford University, Department of Economics, Honors Theses
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