By Iñaki Aldasoro, Sebastian Doerr, Haonan Zhou
In this box, we investigate the flight home effect (FHE) among non-banks. The FHE refers to the finding in Giannetti and Laeven (2012) that, during financial crises in their home country, lead arranger banks cut lending to foreign borrowers by more than they did to domestic borrowers. Giannetti and Laeven also find that the effect is driven by banks that are more exposed to riskier borrowers and with more volatile funding.