Ideas to Action:

Independent research for global prosperity

Publications

 

February 8, 2010

Financial Integration and Foreign Banks in Latin America: Do They Amplify External Financial Shocks? - Working Paper 203

This paper explores the impact of international financial integration on credit markets in Latin America. The overall effect is positive, but the foreign banks do tend to amplify the impact of foreign shocks on credit and interest rates. Important policy recommendations include ring-fencing mechanisms, early-warning systems, and the incorporation for agreements between domestic and foreign supervisors.