01822cas a2200241 a 4500 AALejournalIMF000969 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451852387 1018-5941 BD-DhAAL BD-DhAAL Levy Yeyati, Eduardo. Global Moral Hazard, Capital Account Liberalization and the 'Overlending Syndrome' / Eduardo Levy Yeyati. Washington, D.C. : International Monetary Fund, 1999. 1 online resource (22 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The removal of government guarantees in borrowing countries does not eliminate the moral hazard problem posed by the existence of deposit guarantees in lender countries. The paper shows that, after restrictions on international capital flows are lifted, banks in low-risk developed countries benefit from lending funds captured in home markets at low deposit rates to high-risk/high-yield projects in emerging economies, even though these projects command lower expected returns. This, in turn, has a negative impact on bank profitability in the borrowing country, even when foreign funds are intermediated through domestic banks. The results are consistent with the surge in international bank lending flows that led to recent banking crises in Asia. Mode of access: Internet IMF Working Papers; Working Paper ; No. 1999/100 Full text available on IMF http://elibrary.imf.org/view/journals/001/1999/100/001.1999.issue-100-en.xml IMF e-Library