Global Banks And International Shock Transmission

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Global Banks and International Shock Transmission

Nicola Cetorelli
Global Banks and International Shock Transmission Book PDF

Author : Nicola Cetorelli
Publisher : DIANE Publishing
Page : 41 pages
File Size : 53,9 Mb
Release : 2010-11
Category : Business & Economics
ISBN : 9781437933871

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Global Banks and International Shock Transmission by Nicola Cetorelli Pdf

Global banks played a significant role in transmitting the 2007-09 financial crisis to emerging-market (EM) economies. The authors examine adverse liquidity shocks on main developed-country banking systems and their relationships to EM across Europe, Asia, and Latin Amer., isolating loan supply from loan demand effects. Loan supply in EM across Europe, Asia, and Latin Amer. was affected significantly through three separate channels: (1) a contraction in direct, cross-border lending by foreign banks; (2) a contraction in local lending by foreign banks¿ affiliates in EM; and (3) a contraction in loan supply by domestic banks, resulting from the funding shock to their balance sheets induced by the decline in interbank, cross-border lending. Charts and tables.

Global Banks and International Shock Transmission

Nicola Cetorelli
Global Banks and International Shock Transmission Book PDF

Author : Nicola Cetorelli
Publisher : Unknown
Page : 128 pages
File Size : 53,7 Mb
Release : 2010
Category : Electronic
ISBN : OCLC:730449662

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Global Banks and International Shock Transmission by Nicola Cetorelli Pdf

Global banks played a significant role in the transmission of the 2007 to 2009 crisis to emerging market economies. We examine the relationships between adverse liquidity shocks on main developed-country banking systems to emerging markets across Europe, Asia, and Latin America, isolating loan supply from loan demand effects. Loan supply in emerging markets was significantly affected through three separate channels: a contraction in direct, cross-border lending by foreign banks; a contraction in local lending by foreign banks' affiliates in emerging markets; and a contraction in loan supply by domestic banks resulting from the funding shock to their balance sheet induced by the decline in interbank, cross-border lending. Policy interventions, such as the Vienna Initiative introduced in Europe, influenced the lending channel effects on emerging markets of head office balance sheet shocks.

Crisis Transmission in the Global Banking Network

Galina Hale,Mr.Tümer Kapan,Ms.Camelia Minoiu
Crisis Transmission in the Global Banking Network Book PDF

Author : Galina Hale,Mr.Tümer Kapan,Ms.Camelia Minoiu
Publisher : International Monetary Fund
Page : 38 pages
File Size : 55,8 Mb
Release : 2016-04-12
Category : Business & Economics
ISBN : 9781475551341

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Crisis Transmission in the Global Banking Network by Galina Hale,Mr.Tümer Kapan,Ms.Camelia Minoiu Pdf

We study the transmission of financial sector shocks across borders through international bank connections. For this purpose, we use data on long-term interbank loans among more than 6,000 banks during 1997-2012 to construct a yearly global network of interbank exposures. We estimate the effect of direct (first-degree) and indirect (second-degree) exposures to countries experiencing systemic banking crises on bank profitability and loan supply. We find that direct exposures to crisis countries squeeze banks' profit margins, thereby reducing their returns. Indirect exposures to crisis countries enhance this effect, while indirect exposures to non-crisis countries mitigate it. Furthermore, crisis exposures have real effects in that they reduce banks' supply of domestic and cross-border loans. Our results, based on a large global sample, support the notion that interconnected financial systems facilitate shock transmission.

International Banking and Liquidity Risk Transmission

Claudia M. Buch,Linda S. Goldberg
International Banking and Liquidity Risk Transmission Book PDF

Author : Claudia M. Buch,Linda S. Goldberg
Publisher : Unknown
Page : 35 pages
File Size : 42,9 Mb
Release : 2014
Category : Bank liquidity
ISBN : OCLC:885026748

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International Banking and Liquidity Risk Transmission by Claudia M. Buch,Linda S. Goldberg Pdf

Activities of international banks have been at the core of discussions on the causes and effects of the international financial crisis. Yet we know little about the actual magnitudes and mechanisms for transmission of liquidity shocks through international banks, including the reasons for heterogeneity in transmission across banks. The International Banking Research Network, established in 2012, brings together researchers from around the world with access to micro-level data on individual banks to analyze issues pertaining to global banks. This paper summarizes the common methodology and results of empirical studies conducted in eleven countries to explore liquidity risk transmission. Among the main results is, first, that explanatory power of the empirical model is higher for domestic lending than for international lending. Second, how liquidity risk affects bank lending depends on whether the banks are drawing on official-sector liquidity facilities. Third, liquidity management across global banks can be important for liquidity risk transmission into lending. Fourth, there is substantial heterogeneity in the balance sheet characteristics that affect banks' responses to liquidity risk. Overall, balance sheet characteristics of banks matter for differentiating their lending responses, mainly in the realm of cross-border lending.

Liquidity Management of U. S. Global Banks

Nicola Cetorelli,Linda S. Goldberg
Liquidity Management of U S Global Banks Book PDF

Author : Nicola Cetorelli,Linda S. Goldberg
Publisher : Unknown
Page : 50 pages
File Size : 40,5 Mb
Release : 2011
Category : Banks and banking, International
ISBN : 1437962238

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Liquidity Management of U. S. Global Banks by Nicola Cetorelli,Linda S. Goldberg Pdf

The recent economic crisis highlighted the importance of globally active banks in linking markets. One channel for this linkage is the liquidity management of these banks, specifically the regular flow of funds between parent banks and their affiliates in diverse foreign markets. The authors use the Great Recession as an opportunity to identify the balance-sheet shocks to parent banks in the U.S. and then explore which features of foreign affiliates are associated with protecting, for example, their status as important locations in sourcing funding or as destinations for foreign investment activity. They show that distance from the parent organization plays a significant role in this allocation, where distance is bank-affiliate specific and depends on the location's ex ante relative importance in local funding pools and overall foreign investment strategies. These flows are a form of global interdependence previously unexplored in the literature on international shock transmission. Tables and figures. This is a print on demand report.

The Transmission of Liquidity Shocks: The Role of Internal Capital Markets and Bank Funding Strategies

Mr. Philippe D Karam,Ouarda Merrouche,Moez Souissi,Rima Turk
The Transmission of Liquidity Shocks The Role of Internal Capital Markets and Bank Funding Strategies Book PDF

Author : Mr. Philippe D Karam,Ouarda Merrouche,Moez Souissi,Rima Turk
Publisher : International Monetary Fund
Page : 38 pages
File Size : 44,8 Mb
Release : 2014-11-19
Category : Business & Economics
ISBN : 9781498348393

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The Transmission of Liquidity Shocks: The Role of Internal Capital Markets and Bank Funding Strategies by Mr. Philippe D Karam,Ouarda Merrouche,Moez Souissi,Rima Turk Pdf

We analyze the transmission of bank-specific liquidity shocks triggered by a credit rating downgrade through the lending channel. Using bank-level data for US Bank Holding Companies, we find that a credit rating downgrade is associated with an immediate and persistent decline in access to non-core deposits and wholesale funding, especially during the global financial crisis. This translates into a reduction in lending to households and non-financial corporates at home and abroad. The effect on domestic lending, however, is mitigated when banks (i) hold a larger buffer of liquid assets, (ii) diversify away from rating-sensitive sources of funding, and (iii) activate internal liquidity support measures. Foreign lending is significantly reduced during a crisis at home only for subsidiaries with weak funding self-sufficiency.

Global Financial Stability Report, April 2015

International Monetary Fund. Monetary and Capital Markets Department
Global Financial Stability Report April 2015 Book PDF

Author : International Monetary Fund. Monetary and Capital Markets Department
Publisher : INTERNATIONAL MONETARY FUND
Page : 0 pages
File Size : 42,9 Mb
Release : 2015-04-15
Category : Business & Economics
ISBN : 1498372937

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Global Financial Stability Report, April 2015 by International Monetary Fund. Monetary and Capital Markets Department Pdf

The current report finds that, despite an improvement in economic prospects in some key advanced economies, new challenges to global financial stability have arisen. The global financial system is being buffeted by a series of changes, including lower oil prices and, in some cases, diverging growth patterns and monetary policies. Expectations for rising U.S. policy rates sparked a significant appreciation of the U.S. dollar, while long term bond yields in many advanced economies have decreased—and have turned negative for almost a third of euro area sovereign bonds—on disinflation concerns and the prospect of continued monetary accommodation. Emerging markets are caught in these global cross currents, with some oil exporters and other facing new stability challenges, while others have gained more policy space as a result of lower fuel prices and reduced inflationary pressures. The report also examines changes in international banking since the global financial crisis and finds that these changes are likely to promote more stable bank lending in host countries. Finally, the report finds that the asset management industry needs to strengthen its oversight framework to address financial stability risks from incentive problems between end-investors and portfolio managers and the risk of runs due to liquidity mismatches.

The Great Cross-Border Bank Deleveraging

Mr.Eugenio Cerutti,Mr.Stijn Claessens
The Great Cross Border Bank Deleveraging Book PDF

Author : Mr.Eugenio Cerutti,Mr.Stijn Claessens
Publisher : INTERNATIONAL MONETARY FUND
Page : 0 pages
File Size : 54,5 Mb
Release : 2014-09-25
Category : Business & Economics
ISBN : 1498354785

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The Great Cross-Border Bank Deleveraging by Mr.Eugenio Cerutti,Mr.Stijn Claessens Pdf

International banks greatly reduced their direct cross-border and local affiliates’ lending as the global financial crisis strained balance sheets, lowered borrower demand, and changed government policies. Using bilateral, lender-borrower countrydata and controlling for credit demand, we show that reductions largely varied in line with markets’ prior assessments of banks’ vulnerabilities, with banks’ financial statement variables and lender-borrower country characteristics playing minor roles. We find evidence that moving resources within banking groups became more restricted as drivers of reductions in direct cross-border loans differ from those for local affiliates’ lending, especially for impaired banking systems. Home bias induced by government interventions, however, affected both equally.

Managing Elevated Risk

Iwan J. Azis,Hyun Song Shin
Managing Elevated Risk Book PDF

Author : Iwan J. Azis,Hyun Song Shin
Publisher : Springer
Page : 124 pages
File Size : 44,9 Mb
Release : 2014-12-11
Category : Business & Economics
ISBN : 9789812872845

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Managing Elevated Risk by Iwan J. Azis,Hyun Song Shin Pdf

This book discusses the risks and opportunities that arise in Emerging Asia given the context of a new environment in global liquidity and capital flows. It elaborates on the need to ensure financial and overall economic stability in the region through improved financial regulation and other policy measures to minimize the emergent risks. "Managing Elevated Risk: Global Liquidity, Capital Flows, and Macroprudential Policy—An Asian Perspective" also explores the range of policy options that may be deployed to address the impact of global liquidity on domestic financial and socio-economic conditions including income inequality. The book is primarily aimed at policy makers, financial market regulators and supervisory agencies to help them improve national regulatory systems and to promote harmonization of national regulations and practices in line with global standards. Scholars and researchers will also gain important information and knowledge about the overall impacts of changing global liquidity from the book.

The Transmission of Liquidity Shocks

Mr.Philippe D Karam,Ouarda Merrouche,Moez Souissi,Rima Turk
The Transmission of Liquidity Shocks Book PDF

Author : Mr.Philippe D Karam,Ouarda Merrouche,Moez Souissi,Rima Turk
Publisher : International Monetary Fund
Page : 38 pages
File Size : 52,7 Mb
Release : 2014-11-19
Category : Business & Economics
ISBN : 9781498352888

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The Transmission of Liquidity Shocks by Mr.Philippe D Karam,Ouarda Merrouche,Moez Souissi,Rima Turk Pdf

We analyze the transmission of bank-specific liquidity shocks triggered by a credit rating downgrade through the lending channel. Using bank-level data for US Bank Holding Companies, we find that a credit rating downgrade is associated with an immediate and persistent decline in access to non-core deposits and wholesale funding, especially during the global financial crisis. This translates into a reduction in lending to households and non-financial corporates at home and abroad. The effect on domestic lending, however, is mitigated when banks (i) hold a larger buffer of liquid assets, (ii) diversify away from rating-sensitive sources of funding, and (iii) activate internal liquidity support measures. Foreign lending is significantly reduced during a crisis at home only for subsidiaries with weak funding self-sufficiency.

Global Waves of Debt

M. Ayhan Kose,Peter Nagle,Franziska Ohnsorge,Naotaka Sugawara
Global Waves of Debt Book PDF

Author : M. Ayhan Kose,Peter Nagle,Franziska Ohnsorge,Naotaka Sugawara
Publisher : World Bank Publications
Page : 403 pages
File Size : 47,8 Mb
Release : 2021-03-03
Category : Business & Economics
ISBN : 9781464815454

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Global Waves of Debt by M. Ayhan Kose,Peter Nagle,Franziska Ohnsorge,Naotaka Sugawara Pdf

The global economy has experienced four waves of rapid debt accumulation over the past 50 years. The first three debt waves ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and broader-based than in the previous three waves. Current low interest rates mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood that the current debt wave will end in crisis and, if crises do take place, will alleviate their impact.

The Global Banking Network: What is Behind the Increasing Regionalization Trend?

Mr.Eugenio M Cerutti,Haonan Zhou
The Global Banking Network What is Behind the Increasing Regionalization Trend Book PDF

Author : Mr.Eugenio M Cerutti,Haonan Zhou
Publisher : International Monetary Fund
Page : 59 pages
File Size : 52,7 Mb
Release : 2018-03-09
Category : Business & Economics
ISBN : 9781484345177

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The Global Banking Network: What is Behind the Increasing Regionalization Trend? by Mr.Eugenio M Cerutti,Haonan Zhou Pdf

This paper analyses the nature of the increasing regionalization process in global banking. Despite the large decline in aggregate cross-border banking lending volumes, some parts of the global banking network are currently more interlinked regionally than before the Global Financial Crisis. After developing a simple theoretical model capturing banks' internationalization decisions, our estimation shows that this regionalization trend is present even after controlling for traditional gravitational variables (e.g. distance, language, legal system, etc.), especially among lenders in EMs and non-core banking systems, such as Australia, Canada, Hong Kong, and Singapore. Moreover, this regionalization trend was present before the GFC, but it has increased since then, and it seems to be associated with regulatory variables and the opportunities created by the retrenchment of several European lenders.

The Global Macro Economy and Finance

Franklin Allen,Masahiko Aoki,Nobuhiro Kiyotaki
The Global Macro Economy and Finance Book PDF

Author : Franklin Allen,Masahiko Aoki,Nobuhiro Kiyotaki
Publisher : Springer
Page : 338 pages
File Size : 48,8 Mb
Release : 2016-04-30
Category : Business & Economics
ISBN : 9781137034250

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The Global Macro Economy and Finance by Franklin Allen,Masahiko Aoki,Nobuhiro Kiyotaki Pdf

This volume explores the measurement of economic and social progress in our societies, and proposes new frameworks to integrate economic dimensions with other aspects of human well-being. Leading economists analyse the light that the recent crisis has shed on the global economic architecture, and the policies needed to address these systemic risks.

Global Banks’ Dollar Funding: A Source of Financial Vulnerability

Mr.Adolfo Barajas,Andrea Deghi,Claudio Raddatz,MissDulani Seneviratne,Peichu Xie,Yizhi Xu
Global Banks Dollar Funding A Source of Financial Vulnerability Book PDF

Author : Mr.Adolfo Barajas,Andrea Deghi,Claudio Raddatz,MissDulani Seneviratne,Peichu Xie,Yizhi Xu
Publisher : International Monetary Fund
Page : 50 pages
File Size : 48,5 Mb
Release : 2020-07-03
Category : Business & Economics
ISBN : 9781513549149

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Global Banks’ Dollar Funding: A Source of Financial Vulnerability by Mr.Adolfo Barajas,Andrea Deghi,Claudio Raddatz,MissDulani Seneviratne,Peichu Xie,Yizhi Xu Pdf

Leading up to the global financial crisis, US dollar activity by global banks headquartered outside the United States played a crucial role in transmitting shocks originating in funding markets. Although post-crisis regulation has improved banking systems’ resilience, US dollar funding remains a global vulnerability, as evidenced by strains that reemerged in March 2020 in the midst of the COVID-19 crisis. We show that shocks to US dollar funding costs lead to financial stress in the home economies of these global non-US banks, and to spillovers to borrowers, especially emerging economies. US dollar funding vulnerability amplifies these negative effects, while some policy-related factors act as mitigators, such as swap line arrangements between central banks and international reserve holdings. Thus, these vulnerabilities should be monitored and, to the extent possible, controlled.

Dollar Funding and the Lending Behavior of Global Banks

Victoria Ivashina
Dollar Funding and the Lending Behavior of Global Banks Book PDF

Author : Victoria Ivashina
Publisher : Unknown
Page : 51 pages
File Size : 44,7 Mb
Release : 2015
Category : Electronic
ISBN : OCLC:1308417558

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Dollar Funding and the Lending Behavior of Global Banks by Victoria Ivashina Pdf

A large share of dollar-denominated lending is done by non-U.S. banks, particularly European banks. We present a model in which such banks cut dollar lending more than euro lending in response to a shock to their credit quality. Because these banks rely on wholesale dollar funding, while raising more of their euro funding through insured retail deposits, the shock leads to a greater withdrawal of dollar funding. Banks can borrow in euros and swap into dollars to make up for the dollar shortfall, but this may lead to violations of covered interest parity (CIP) when there is limited capital to take the other side of the swap trade. In this case, synthetic dollar borrowing also becomes expensive, which causes cuts in dollar lending. We test the model in the context of the Eurozone sovereign crisis, which escalated in the second half of 2011 and resulted in U.S. money-market funds sharply reducing their exposure to European banks in the year that followed. During this period dollar lending by Eurozone banks fell relative to their euro lending, and firms who were more reliant on Eurozone banks before the Eurozone crisis had a more difficult time borrowing.