TY - BOOK ID - 65579764 TI - US vs. Euro Area: Who Drives Cross-Border Bank Lending to EMs? AU - Cerutti, Eugenio. AU - Osorio Buitron, Carolina. PY - 2019 SN - 1513515586 1513511904 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Monetary policy KW - Banks and Banking KW - Money and Monetary Policy KW - Industries: Financial Services KW - International Investment KW - Long-term Capital Movements KW - International Lending and Debt Problems KW - International Financial Markets KW - General Financial Markets: Government Policy and Regulation KW - Banks KW - Depository Institutions KW - Micro Finance Institutions KW - Mortgages KW - Financial Institutions and Services: Government Policy and Regulation KW - Interest Rates: Determination, Term Structure, and Effects KW - Monetary Policy, Central Banking, and the Supply of Money and Credit: General KW - Financial Institutions and Services: General KW - Banking KW - Monetary economics KW - Finance KW - Bank credit KW - Central bank policy rate KW - Yield curve KW - Cross-border banking KW - Money KW - Financial services KW - Financial sector KW - Economic sectors KW - Banks and banking KW - Interest rates KW - Credit KW - International finance KW - Financial services industry KW - United States UR - https://www.unicat.be/uniCat?func=search&query=sysid:65579764 AB - This paper analyzes the drivers of cross-border bank lending to 49 Emerging Markets (EMs) during the period 1990Q1-2014Q4, by assessing the impact of monetary, financial and real sector shocks in both the US and the euro area. The literature has traditionally highlighted the influence of US monetary policy on driving cross-border bank flows, and more recently the importance of both US and Euro Area (EA) financial/banking sectors’ related variables. Our contribution is the simultaneous analysis of the role of these US and EA drivers, as well as their interactions with real sector shocks. We corroborate the negative impact of US monetary policy tightening on cross-border lending to EMs, but we find that EA monetary policy seems to have an impact mostly on Emerging Europe, reflecting the fact that cross-border lending to most other EM regions is dollar denominated. We also find that real sector shocks in both the US and EA trigger an increase in cross-border lending, but less in EA when modeling the financial sector. Finally, for financial sector shocks, such as those associated with a decrease in bank leverage, our results indicate a broad-based overall contraction of cross-border lending if the shock originates in the US, and heterogenous effects across borrowing regions if the shock originates in the EA. ER -