Found 5 article(s) for author 'Lending'

China’s Overseas Lending

China’s Overseas Lending. Carmen Reinhart, July 2017, Paper, “Compared with China’s dominance in world trade, its expanding role in global finance is poorly documented and understood. Over the past decades, China has exported record amounts of capital to the rest of the world. Many of these financial flows are not reported to the IMF, the BIS or the World Bank. “Hidden debts” to China are especially significant for about three dozen developing countries, and distort the risk assessment in both policy surveillance and the market pricing of sovereign debt. We establish the size, destination, and characteristics of China’s overseas lending. We identify three key distinguishing features. First, almost all of China’s lending and investment abroad is official. As a result, the standard “push” and “pull” drivers of private cross-border flows do not play the same role in this case. Second, the documentation of China’s capital exports is (at best) opaque. China does not report on its official lending and there is no comprehensive standardized data on Chinese overseas debt stocks and flows. Third, the type of flows is tailored by recipient. Advanced and higher middle-income countries tend to receive portfolio debt flows, via sovereign bond purchases of the People’s Bank of China. Lower income developing economies mostly receive direct loans from China’s state-owned banks, often at market rates and backed by collateral such as oil. Our new dataset covers a total of 1,974 Chinese loans and 2,947 Chinese grants to 152 countries from 1949 to 2017. We find that about one half of China’s overseas loans to the developing world are “hidden”.Link

Tags: , , , , , , ,

The Decline of Big-Bank Lending to Small Business: Dynamic Impacts on Local Credit and Labor Markets

The Decline of Big-Bank Lending to Small Business: Dynamic Impacts on Local Credit and Labor Markets. Samuel Hanson, Jeremy Stein, March 2017, Paper, “Small business lending by the four largest U.S. banks fell sharply relative to other banks beginning in 2008 and remained depressed through 2014. We explore the consequences of this credit supply shock, with a particular focus on the resulting dynamic adjustment process. Using a difference-indifference approach that compares counties where the Top 4 banks had a higher initial market share to counties where they had a smaller share, we find that the aggregate flow of small business credit fell and interest rates rose from 2006 to 2010 in high Top 4 counties. Economic activity also contracted in these affected counties: fewer businesses expanded employment, the unemployment rate rose, and wages fell. Moreover, the employment effects were concentrated in industries that are most reliant on external finance, such as manufacturing.Link

Tags: , , , , , ,

The Federal Reserve: The Weakest Lender of Last Resort Among Its Peers

The Federal Reserve: The Weakest Lender of Last Resort Among Its Peers. Hal Scott, November 25, 2015, Paper. “This article for the first time compares the Federal Reserve’s powers as lender of last resort (‘LLR’) and its ability to fight contagion, with its three major peers, the Bank of England (the ‘BOE’), the European Central Bank (the ‘ECB’) and the Bank of Japan (the ‘BOJ’). It concludes that the Federal Reserve (the ‘Fed’) is currently the weakest of the four, largely due to a hostile political environment for LLR powers, which are equated with bailouts, and restrictions placed by the 2010 Dodd–Frank Act on the Fed’s ability to loan to non-banks, whose role in the financial system is ever-increasing. This is a concern for the global as well as the US financial system, given the economic importance of the United States and the use of the dollar as a reserve currency …Link

Tags: , , ,

Entrepreneurial Finance Lab: Scaling an Innovative Start-up Financing Venture

Entrepreneurial Finance Lab: Scaling an Innovative Start-up Financing Venture. William R. Kerr, Joan Farre-Mensa, January 2014, Case. “EFL provides credit-scoring services in developing countries using psychometric assessment, but the potential loss of a large customer makes them reconsider their scaling narrative…” May require purchase or user account. Link Verified October 11, 2014

Tags: , , , , , , , , , , , , , , , , ,