International spillovers and local credit cycles

di Giovanni, J., Kalemli-Özcan, Ş., Ulu, M. F. and Baskaya, Y. S. (2022) International spillovers and local credit cycles. Review of Economic Studies, 89(2), pp. 733-773. (doi: 10.1093/restud/rdab044)

Abstract

This article studies the transmission of the Global Financial Cycle (GFC) to domestic credit market conditions in a large emerging market, Turkey, over 2003–13. We use administrative data covering the universe of corporate credit transactions matched to bank balance sheets to document four facts: (1) an easing in global financial conditions leads to lower borrowing costs and an increase in local lending; (2) domestic banks more exposed to international capital markets transmit the GFC locally; (3) the fall in local currency borrowing costs is larger than foreign currency borrowing costs due to the co-movement of the uncovered interest rate parity (UIP) premium with the GFC over time; (4) data on posted collateral for new loan issuances show that collateral constraints do not relax during the boom phase of the GFC.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Baskaya, Dr Soner
• Authors: di Giovanni, J., Kalemli-Özcan, Ş., Ulu, M. F., and Baskaya, Y. S.
• College/School: College of Social Sciences > Adam Smith Business School > Economics
• Journal Name: Review of Economic Studies
• Publisher: Oxford University Press
• ISSN: 0034-6527
• ISSN (Online): 1467-937X
• Published Online: 12 October 2021
• Data DOI: 10.5281/zenodo.4733035