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Foreign direct investment (FDI) is essential for enhancing economic resilience and promoting sustainable development. However, inefficiencies in financial connectivity and capital allocation have hindered the facilitation of FDI. Bank linkages between countries in the global sectors of multinational enterprises (MNEs) offer potential solutions to these challenges. In this paper, we focus on whether sustainable FDI can benefit from consolidating bank linkages, which are measured for each pair of countries in each year as the number of bank pairs in both countries that are connected through cross-border syndicated lending. Using the gravity model, we provide empirical evidence based on cross-border data to support the following conclusions: (1) Bank linkages can sustainably enhance the host country’s attractiveness to FDI through information, external financing, and international financial services channels. (2) This positive effect is pronounced in host countries with lower financial development, weaker institution quality, and higher investment risk while remaining insignificant for OECD countries. (3) Bank linkages exhibit a lagged impact on FDI, but newly established bank linkages are more conducive to inward FDI than those established earlier. In this paper, we offer some policy implications for emerging economies and suggest that emerging economies should continue to deepen their financial openness and strengthen international bank links through various means to attract more inward FDI. Full article

The lead arrangers of syndicated loans often have lending relationships with the borrowers, while other lenders participating in the syndicate largely engage in an arm’s length transaction. Relatively little is known about how these relationships affect the shares of syndicated loans that the lead arrangers retain in their portfolio. Using a random sample of 10,328 syndicated loans made to 7316 nonfinancial U.S. firms over the period 1987 to 2013, this paper investigates the impact of lending relationships on the shares of loans retained. The results show that lending relationships are associated with a significant reduction in retained shares. These results are robust to alternative estimation techniques, such as propensity score matching and binary endogenous treatment models, which are employed to address endogeneity concerns. Furthermore, the results provide additional evidence that the existence and strength of lending relationships lead to decreased retained shares, particularly for non-top-tier lead arrangers. Moreover, the findings also demonstrate that when lead arrangers have lending relationships with borrowers, they retain significantly smaller shares whether the loans are made to informationally opaque, small, or speculative-grade-rating firms. Overall, the findings of this paper have important implications for lenders seeking to reduce their risk exposure in syndicated loans. Full article

After the dissolution of the Habsburg Empire, leaders in successor states were eager to become economically independent from the former capital Vienna. They therefore quickly implemented a set of neomercantilistic measures, especially nationalization programs. Nevertheless, the 1920s saw a reestablishment of the common market in the former territories of the Habsburg Empire in terms of interregional trade and interlocking directorates, mainly because of the business strategy of international financial syndicates that were based on the traditional Viennese commercial relations with the successor states. The international credit of Jewish bankers like Louis Rothschild, Rudolf Sieghart, and Max Feilchenfeld and others mattered. After the “Big Bang” at Wall Street in 1929, the industrial holdings of the Viennese banks and the maturity problem (short-term borrowing, long-term lending) in their relations to East European debtors and Western financiers caused the Creditanstalt-crisis of 1931 and put an end to Vienna’s position as a financial hub in East Central Europe. However, even during the crisis of the 1930s, the share of the successor states in the bilateral balances of trade indicates path dependency on a smaller scale. Full article