VoxEU Column
by Catherine Casanova, Eugenio Cerutti and Swapan-Kumar Pradhan
“Although Chinese banks have remained the top lenders to emerging markets and developing economies (EMDEs), their growth has slowed and their lending patterns have changed since the pandemic. This column shows that while cross-border lending by Chinese banks to their EMDE borrowers was highly correlated with bilateral trade flows between both countries prior to the pandemic, there has since been a marked correlation shift from cross-border lending and trade, to lending and FDI. However, Chinese banks have continued to exhibit higher levels of risk tolerance relative to other bank nationalities, as borrower country risk variables are positively correlated with Chinese banks’ market shares but not with their amounts of cross-border lending.”