| Abstract: |
We examine the composition and drivers of cross-border bank lending between
1995 and 2012, distinguishing between syndicated and non-syndicated loans. We
show that on-balance sheet syndicated loan exposures, which account for almost
one third of total cross-border loan exposures, increased during the global
financial crisis due to large drawdowns on credit lines extended before the
crisis. Our empirical analysis of the drivers of cross-border loan exposures
in a large bilateral dataset leads to three main results. First, banks with
lower levels of capital favor syndicated over other kinds of cross-border
loans. Second, borrower country characteristics such as level of development,
economic size, and capital account openness, are less important in driving
syndicated than non-syndicated loan activity, suggesting a diversification
motive for syndication. Third, information asymmetries between lender and
borrower countries became more binding for both types of cross-border lending
activity during the recent crisis. |