Global Bank Lending Flows: Identifying the Flight Home Effect

Beatrice Weder di Mauro and Caroline Van Rijckeghem

No 10139, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We propose a general specification to estimate the strength of the flight home effect, provide a decomposition into lender and recipient effects and country-by country measures. Flight home occurs when the change in domestic credit extended by domestic banks cannot be accounted for by recipient or lender effects. Based on break-adjusted BIS data, we find evidence of flight home for almost all banking systems with the notable exception of Canada, the US and Japan. In periods of relative calm, reversals of the home bias are small. The result is cumulative renationalization of bank lending.

Keywords: Deglobalization; Financial protectionism; International banking system (search for similar items in EconPapers)
JEL-codes: E52 F34 G21 (search for similar items in EconPapers)
Date: 2014-09
New Economics Papers: this item is included in nep-ban, nep-mac and nep-opm
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Citations: View citations in EconPapers (6)

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