BIS Working Papers – Dampening global financial shocks: can macroprudential regulation help (more than capital controls)?

Author(s):Katharina Bergant, Francesco Grigoli, Niels-Jakob Hansen and Damiano Sandri Date:May 2023 Abstract: We show that macroprudential regulation significantly dampens the impact of global financial shocks on emerging markets. Specifically, a tighter level of regulation reduces the sensitivity of GDP growth to capital flow shocks and movements in the VIX. A broad set of macroprudential tools[…]

NBER Working Paper – From Carry Trades to Trade Credit: Financial Intermediation by Non-Financial Corporations

Author(s):Bryan Hardy and Felipe Saffie Date:April 2023 Abstract: We use unique firm-level data from Mexico to document that non-financial corporations engage in carry trades by borrowing in foreign currency (FX) and lending in domestic currency, largely in the form of trade credit, accumulating currency risk in the process. We show at a quarterly frequency that[…]

NBER Working Paper – Collateral Advantage: Exchange Rates, Capital Flows and Global Cycles

Author(s):Michael B. Devereux, Charles Engel & Steve Pak Yeung Wu Date:April 2023 Abstract: We construct a two-country New Keynesian model in which US government debt has an advantage as a superior collateral asset in the balance sheets of banks. The model can account for the observed response of the US dollar and US bond returns[…]

IHEID Working Paper – Bank Ownership Around the World

Author(s):Ugo Panizza Date:March 2023 Abstract: This paper builds a dataset on bank ownership that covers more than 6,500 banks in181 countries (59 low-income economies, 72 middle-income economies, and 50 high-income economies) over 1995-2020. I show that until 2010, there was a reduction instate-ownership of banks and an increase foreign ownership. However, the GlobalFinancial Crisis interrupted[…]

CEPR Discussion Paper – Less Bank Regulation, More Non-Bank Lending

Author(s):Mary Chen, Seung Jung Lee, Daniel Neuhann, and Farzad Saidi Date:March 2023 Abstract: Bank deregulation in the form of the repeal of the Glass-Steagall Act facilitated the entry of non-bank lenders into the market for syndicated loans during the pre-2008 credit boom. Institutional investors disproportionately purchase tranches of loans originated by universal banks able to[…]

CEPR Discussion Paper – Stressed Banks? Evidence from the Largest-Ever Supervisory Exercise

Author(s):Puriya Abbassi, Rajkamal Iyer, José-Luis Peydró, and Paul Soto Date:March 2023 Abstract: We study short-term and medium-term changes in bank risk-taking as a result of supervision, and the associated real effects. For identification, we exploit the European Central Bank’s asset-quality- review (AQR) in conjunction with security and credit registers. After the AQR announcement, reviewed banks[…]

NBER Working Paper – Global Risk, Non-Bank Financial Intermediation, and Emerging Market Vulnerabilities

Author(s):Anusha Chari Date:April 2023 Abstract: Over the last two decades, the unprecedented increase in non-bank financial intermediation, particularly open-end mutual funds and ETFs, accounts for nearly half of the external financing flows to emerging markets exceeding cross-border lending by global banks. Evidence suggests that investment fund flows enhance risk-sharing across borders and provide emerging markets[…]