Global Liquidity And Drivers Of Cross Border Bank Flows

Author : Mr.Eugenio Cerutti,Mr.Stijn Claessens,Mr.Lev Ratnovski
Publisher : International Monetary Fund
Page : 33 pages
File Size : 41,8 Mb
Release : 2014-04-29
Category : Business & Economics
ISBN : 9781484362112

Get Book

Global Liquidity and Drivers of Cross-Border Bank Flows by Mr.Eugenio Cerutti,Mr.Stijn Claessens,Mr.Lev Ratnovski Pdf

This paper provides a definition of global liquidity consistent with its meaning as the “ease of financing” in international financial markets. Using a longer time series and broader sample of countries than in previous studies, it identifies global factors driving cross-border bank flows, alongside country-specific factors. It confirms the explanatory power of US financial conditions, with flows decreasing in market volatility (VIX) and term premia, and increasing in bank leverage, growth in domestic credit and M2. A new finding is that similar variables for other systemic countries – the UK and the Euro Area – are also important, sometimes even more so, consistent with the dominant role of European banks in cross-border banking. Furthermore, recipient country characteristics are found to affect not only the level of country-specific flows, but also the cyclical impact of global liquidity, with sensitivities of flows to banks decreasing with stronger macroeconomic frameworks and better bank regulation, but less so for flows to non-financial firms.

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 63 pages
File Size : 41,6 Mb
Release : 2014-12-03
Category : Business & Economics
ISBN : 9781498343657

Get Book

Global Liquidity - Issues for Surveillance by International Monetary Fund Pdf

The paper starts by presenting evidence of commonality in global financial conditions. This commonality is then related to specific drivers of global financial conditions through a range of transmission channels, including cross-border banking and portfolio flows. Empirical analysis shows a range of price and quantity factors, including measures of risk, bank leverage, and interest rates in financial centers, to drive in part these flows. Country specific policies, including exchange rate and prudential frameworks, are shown to affect the transmission of global conditions. Much remains unknown though, including how evolving structures of global funding, changing institutions, and ongoing financial innovations affect the mechanics of liquidity creation, the channels of liquidity transmission, and potential risks going forward.

Author : Thorvardur T. Olafsson
Publisher : International Monetary Fund
Page : 50 pages
File Size : 54,5 Mb
Release : 2018-09-11
Category : Business & Economics
ISBN : 9781484376621

Get Book

Cross-Border Credit Intermediation and Domestic Liquidity Provision in a Small Open Economy by Thorvardur T. Olafsson Pdf

This paper develops a small open economy model where global and domestic liquidity is intermediated to the corporate sector through two financial processes. Investment banks intermediate cross-border credit through interlinked debt contracts to entrepreneurs and commercial banks intermediate domestic savings to liquidity constrained final good producers. Both processes are needed to facilitate development of key production inputs. The model captures procyclical investment bank leverage dynamics, global liquidity spillovers, domestic money market pressures, and macrofinancial linkages through which shocks propagate across the two processes, affecting spreads and balance sheets, as well as the real economy through investment and working capital channels.

Author : Sangyup Choi,Davide Furceri
Publisher : International Monetary Fund
Page : 51 pages
File Size : 49,8 Mb
Release : 2018-01-05
Category : Business & Economics
ISBN : 9781484336939

Get Book

Uncertainty and Cross-Border Banking Flows by Sangyup Choi,Davide Furceri Pdf

While global uncertainty—measured by the VIX—has proven to be a robust global “push” factor of international capital flows, there has been no systematic study assessing the role of country-specific uncertainty as a key (pull and push) factor of international capital flows. This paper tries to fill this gap in the literature by examining the effects of country-specific uncertainty shocks on cross-border banking flows using the confidential Bank for International Settlements Locational Banking Statistics data. The dyadic structure of this data allows to disentangle supply and demand factors and to better identify the effect of uncertainty shocks on cross-border banking flows. The results of this analysis suggest that: (i) uncertainty is both a push and pull factor that robustly predicts a decrease in both outflows (retrenchment) and inflows (stops); (ii) global banks rebalance their lending towards safer foreign borrowers from local borrowers when facing higher uncertainty; (iii) this rebalancing occurs only towards advanced economies (flight to quality), but not emerging market economies.

Author : Mr.Eugenio Cerutti,Mr.Stijn Claessens
Publisher : International Monetary Fund
Page : 38 pages
File Size : 55,5 Mb
Release : 2014-09-25
Category : Business & Economics
ISBN : 9781498332620

Get Book

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.

Author : Silvia Albrizio,Sangyup Choi,Davide Furceri,Chansik Yoon
Publisher : International Monetary Fund
Page : 61 pages
File Size : 47,7 Mb
Release : 2019-11-01
Category : Business & Economics
ISBN : 9781513518770

Get Book

International Bank Lending Channel of Monetary Policy by Silvia Albrizio,Sangyup Choi,Davide Furceri,Chansik Yoon Pdf

How does domestic monetary policy in systemic countries spillover to the rest of the world? This paper examines the transmission channel of domestic monetary policy in the cross-border context. We use exogenous shocks to monetary policy in systemically important economies, including the U.S., and local projections to estimate the dynamic effect of monetary policy shocks on bilateral cross-border bank lending. We find robust evidence that an increase in funding costs following an exogenous monetary tightening leads to a statistically and economically significant decline in cross-border bank lending. The effect is weakened during periods of high uncertainty. In contrast, the effect is found to not vary according to the degree of borrower country riskiness, further weakening support for the international portfolio rebalancing channel.

Author : Sandra Eickmeier,Leonardo Gambacorta,Boris Hofmann
Publisher : Unknown
Page : 42 pages
File Size : 44,5 Mb
Release : 2013
Category : International finance
ISBN : IND:30000147219442

Get Book

Understanding Global Liquidity by Sandra Eickmeier,Leonardo Gambacorta,Boris Hofmann Pdf

Author : Iwan J. Azis,Hyun Song Shin
Publisher : Springer
Page : 124 pages
File Size : 41,9 Mb
Release : 2014-12-11
Category : Business & Economics
ISBN : 9789812872845

Get Book

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.

Author : Sabine Herrmann,Dubravko Mihaljek
Publisher : Unknown
Page : 50 pages
File Size : 41,5 Mb
Release : 2010
Category : Banks and banking, International
ISBN : IND:30000139911725

Get Book

The Determinants of Cross-border Bank Flows to Emerging Markets by Sabine Herrmann,Dubravko Mihaljek Pdf

This paper studies the nature of spillover effects in bank lending flows from advanced to the emerging market economies and identifies specific channels through which such effects occur. Based on a gravity model we examine a panel data set on cross-border bank flows from 17 advanced to 28 emerging market economies in Asia, Latin America and central and eastern Europe from 1993 to 2008. The empirical analysis suggests that global as well as country specific factors are significant determinants of cross-border bank flows. Greater global risk aversion and expected financial market volatility seem to have been the most important factors behind the decrease in cross-border bank flows during the crisis of 2007-08. The decrease in cross-border loans to central and eastern Europe was more limited compared to Asia and Latin America, in large measure because of the higher degree of financial and monetary integration in Europe, and relatively sound banking systems in the region. These results are robust to various specification, sub-samples and econometric methodologies.

Author : Mr.Eugenio Cerutti,Mr.Stijn Claessens,Mr.Lev Ratnovski
Publisher : International Monetary Fund
Page : 33 pages
File Size : 41,7 Mb
Release : 2014-04-29
Category : Business & Economics
ISBN : 9781475517729

Get Book

Global Liquidity and Drivers of Cross-Border Bank Flows by Mr.Eugenio Cerutti,Mr.Stijn Claessens,Mr.Lev Ratnovski Pdf

This paper provides a definition of global liquidity consistent with its meaning as the “ease of financing” in international financial markets. Using a longer time series and broader sample of countries than in previous studies, it identifies global factors driving cross-border bank flows, alongside country-specific factors. It confirms the explanatory power of US financial conditions, with flows decreasing in market volatility (VIX) and term premia, and increasing in bank leverage, growth in domestic credit and M2. A new finding is that similar variables for other systemic countries – the UK and the Euro Area – are also important, sometimes even more so, consistent with the dominant role of European banks in cross-border banking. Furthermore, recipient country characteristics are found to affect not only the level of country-specific flows, but also the cyclical impact of global liquidity, with sensitivities of flows to banks decreasing with stronger macroeconomic frameworks and better bank regulation, but less so for flows to non-financial firms.

Author : Mr.Eugenio Cerutti,Mr.Stijn Claessens
Publisher : INTERNATIONAL MONETARY FUND
Page : 0 pages
File Size : 44,7 Mb
Release : 2014-09-25
Category : Business & Economics
ISBN : 1498354785

Get Book

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.

Author : Sabine Herrmann
Publisher : Unknown
Page : 68 pages
File Size : 53,5 Mb
Release : 2016
Category : Electronic
ISBN : OCLC:1306165245

Get Book

The Determinants of Cross-Border Bank Flows to Emerging Markets by Sabine Herrmann Pdf

This paper studies the nature of spillover effects in bank lending flows from advanced to the emerging market economies and identifies specific channels through which such effects occur. Based on a gravity model we examine a panel data set on cross-border bank flows from 17 advanced to 28 emerging market economies in Asia, Latin America and central and eastern Europe from 1993 to 2008. The empirical analysis suggests that global as well as country specific factors are significant determinants of cross-border bank flows. Greater global risk aversion and expected financial market volatility seem to have been the most important factors behind the decrease in cross-border bank flows during the crisis of 2007-08. The withdraw of cross-border loans from central and eastern Europe was more limited compared to Asia and Latin America, in large measure because of the higher degree of financial and monetary integration in Europe, and relatively sound banking systems in the region. These results are robust to various specification, sub-samples and econometric methodologies.

Author : International Monetary Fund. Monetary and Capital Markets Department
Publisher : INTERNATIONAL MONETARY FUND
Page : 0 pages
File Size : 42,8 Mb
Release : 2015-04-15
Category : Business & Economics
ISBN : 1498372937

Get Book

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.

Author : International Monetary Fund. Research Dept.
Publisher : International Monetary Fund
Page : 18 pages
File Size : 40,9 Mb
Release : 2014-10-11
Category : Business & Economics
ISBN : 9781498340045

Get Book

IMF Research Bulletin, September 2014 by International Monetary Fund. Research Dept. Pdf

This issue of the IMF Research Bulletin opens with a letter from the new editor, Rabah Arezki. The Research Summaries are a "Primer on 'Global Liquidity'" (Eugenio Cerutti, Stijn Claessens, and Lev Ratnovski); and "Trade Integration adn Business Cycle Synchronization" (Kevin Cheng, Romain Duval, and Dulani Senevirante). The Q&A column looks at "Seven Questions on the Global Housing Markets" (Hites Ahir, Heedon Kang, and Prakash Loungani). September 2014 issue of the Bulletin also includes updates on IMF Working Papers, Staff Discussion Notes, and Recommended Readings from the IMF Bookstore, as well as special announcements on new staff publications and the Fifteenth Annual Jacques Polak Research Conference. Also included is information on the latest issue of “IMF Economic Review” with a link to an article by Paul Krugman.

Author : Yoichi Matsubayashi,Shigeto Kitano
Publisher : Springer Nature
Page : 240 pages
File Size : 43,6 Mb
Release : 2022-09-03
Category : Business & Economics
ISBN : 9789811936135

Get Book

Global Financial Flows in the Pre- and Post-global Crisis Periods by Yoichi Matsubayashi,Shigeto Kitano Pdf

This book covers many aspects of excessive expansion of cross-border capital flows underlying the global financial crises that occurred in succession in the form of the subprime mortgage crisis, the collapse of Lehman Brothers, and the European debt crisis. Obtaining a broader picture of financial flows at the global level from various perspectives is essential to comprehensively understand the fundamental causes for a series of global-scale financial crises and to formulate effective policy responses in the future. The topics addressed here include a basic concept and overview of global liquidity in a broad sense, domestic and international credit activities of financial institutions in both advanced and emerging countries, and global demand for US dollars. Offshore bond issuance in BRICs countries, including its implications for the Chinese shadow banking sector, uncovered interest rate parity puzzle, and related policies such as capital controls are covered as well. This book is highly recommended to readers who seek an in-depth and up-to-date integrated overview of the dynamics of today’s globalized financial markets.