a column by Mathias Hoffmann, Egor Maslov, Bent Sørensen and Iryna Stewen for VOX: CEPR’s Policy Portal
Bank-to-bank lending in the euro area has increased, direct cross-border lending has not.
The column shows that dependence on domestic banks reduces risk-sharing in a crisis, reducing GDP growth in affected country-sectors. Benefits from banking integration are only robust to global shocks if banking integration takes the form of cross-border lending to firms and households.
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