Working Paper No. 247
By Drew Dahl and Andrew Logan
The paper analyses the performance outcomes on foreign credits made by UK-owned banks to borrowers in 17 foreign countries between 1991 and 2000. The analysis is unique in its use of bank-specific data on overdue credits in individual countries. Results indicate that credit repayment in a given country is influenced by exports to, and economic activity in, another country linked by trading relationships. The observed cross-country interdependence is relevant to the understanding of risk management practices of international banks.
The exposure of international bank loans to third-country risk: an empirical analysis of overdue claims