Global Banks’ Spillovers to Emerging Markets: Macro to Micro Transmission

Seminario de investigación del IIEP
Global Banks’ Spillovers to Emerging Markets: Macro to Micro Transmission
Expositor | Santiago Camara | McGill University – Red NIE

We study the macroeconomic and microeconomic transmission of global bank credit supply shocks to Emerging Market Economies (EMEs). Using the identification strategy of Ottonello and Wong 2020, which exploits high-frequency co-movements between global banks’ net worth and credit spreads, we isolate exogenous shifts in global credit supply. Positive shocks ease financial conditions in EMEs, boosting capital inflows, domestic credit, and real activity. These effects are robust across countries, specifications, and alternative estimation methods. Using detailed administrative data from Uruguay, we show that less leveraged and more liquid banks expand lending more aggressively following global credit easing. At the firm level, borrowing responses are systematically smaller for more indebted firms, particularly those with weaker collateral or credit quality. These results suggest that financial heterogeneity shapes the international transmission of global credit supply shocks, with balance sheet strength playing a central role in determining which banks and firms benefit most from favorable global financial conditions.
Autores | Rodrigo Arnabal, Santiago Camara, Cecilia Dassatti

Lugar | FCE-UBA | Aula Olivera