This paper studies the implications of cross-border financial integration for financialstability when banks’ loan portfolios adjust endogenously. Banks can be subjectto sectoral and aggregate domestic shocks. After integration they can share theserisks in a complete interbank market. When...

Motivated by current concerns over foreign currency exposures in emerging economies, we examine the currency denomination of business loans made in Bulgaria prior to the current crisis. We analyze information on the requested and granted currency for more than hundred thousand loans granted by...