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Beyond cross-border banking: Debt issuance activity after the global financial crisis

Juan Jose Cortina Lorente's picture

Global banks had rapidly expanded their lending activities abroad before the global financial crisis, during the 1990s and early 2000s. Between 1991 and 2007, the volume of syndicated loan issuances a year by nonfinancial corporations increased more than seven times in high-income countries and more than eight times in developing ones (figure 1). However, the global financial crisis (GFC) hit global banks in the developed world especially hard, which reacted by reducing their cross-border lending activities worldwide.

Figure 1. Issuance Activity in Syndicated Loan Markets, 1991–2014
Figure 1. Issuance Activity in Syndicated Loan Markets, 1991–2014

Source: SDC Platinum.

Globalization and Banking

Asli Demirgüç-Kunt's picture

Since the global financial crisis of 2007, international banking has attracted heightened interest from policy makers, researchers, and other financial sector stakeholders. Perhaps no sector of the economy better illustrates the potential benefits—but also the perils—of deeper integration than banking. Before the crisis, international banks (banks that do business outside of the country they are headquartered in) were generally considered to be an important contributor to financial development as well as economic growth. This belief coincided with a significant increase in financial globalization in the decade prior to the crisis, particularly for banking institutions.

How Can Finance Influence Productivity of Agricultural Firms?

Claudia Ruiz's picture

Worldwide, agriculture is the main source of income among the rural poor. Relative to other sectors, agricultural growth can reduce rural poverty rates faster and more effectively (Christiaensen and others 2011). As discussed in the GFDR 2014, one relevant vehicle to achieve growth in the sector may be finance.

Farmers’ decisions to invest and to produce are closely influenced by access to financial instruments. If appropriate risk mitigation products are lacking, or if available financial instruments do not match farmers’ needs, farmers may be discouraged to adopt better technologies, to purchase agricultural inputs, or to make other decisions that can improve the efficiency of their businesses. Improving access to finance can increase farmers’ investment choices and provide them with more effective tools to manage risks (Karlan and others 2012a, Cai and others 2009).

The Promise of Financial Inclusion

Mahmoud Mohieldin's picture

The following post first appeared on the Huffington Post.

Half the world's adults, approximately 2.5 billion individuals, do not have an account with a formal financial institution. Lack of access to finance is disproportionately skewed towards the poor, women, youth, and rural residents. Defined as the proportion of individuals and firms that use financial services, financial inclusion is increasingly seen as critical for ending extreme poverty and supporting inclusive and sustainable development. It provides people with the tools to invest in themselves by saving for retirement, investing in education, capitalizing on business opportunities, and confronting shocks (Global Financial Development Report, 2014). According to the World Bank Group's newly launched Global Financial Development Report 2014 on Financial Inclusion, most of the unbanked cite barriers such as cost, lack of documentation, distance, lack of trust, or religious reasons.