Author(s):Maximilian Grimm, Òscar Jordà, Moritz Schularick, and Alan M. Taylor Date:February 2023 Abstract: Do periods of persistently loose monetary policy increase financial fragility and the likelihood of a financial crisis? This is a central question for policymakers, yet the literature does not provide systematic empirical evidence about this link at the aggregate level. In this[…]
Author(s):Paul Bergin, Woo Jin Choi, and Ju H. Pyun Date:February 2023 Abstract: While substantial empirical research has evaluated the question of whether capital account openness promotes economic growth, this paper finds empirical evidence for cases where the opposite is true—that a policy of capital controls can promote economic growth, when combined with a policy of[…]
Author(s):Toni Ahnert, Peter Hoffmann, Agnese Leonello, and Davide Porcellacchia Date:February 2023 Abstract: What is the effect of Central Bank Digital Currency (CBDC) on financial stability? We answer this question by studying a model of financial intermediation with an endogenously determined probability of a bank run, using global games. As an alternative to bank deposits, consumers[…]
Author(s):Iñaki Aldasoro, Sebastian Doerr, and Haonan Zhou Date:February 2023 Abstract: This paper shows that non-banks curtail their syndicated credit by significantly more than banks during crises, even after accounting for time-varying lender and borrower characteristics. We provide novel evidence that differences in the value of lending relationships explain most of the gap: unlike for banks,[…]
Author(s):Desislava Andreeva, Andra Coman, Mary Everett, Maren Froemel, Kelvin Ho, Simon Lloyd, Baptiste Meunier, Justine Pedrono, Dennis Reinhardt, Andrew Wong, Eric Wong, and Dawid Żochowski Date:January 2023 Abstract: We study the effects of negative interest rate policies (NIRP) on the transmission of monetary policy through cross-border lending. Using bank-level data from international financial centres (IFCs)[…]
Author(s):Wenqian Huang, Angelo Ranaldo, Andreas Schrimpf, and Fabricius Somogyi Date:February 2023 Abstract: We study dealers’ liquidity provision in the currency market. We show that at times when dealers’ intermediation capacity is constrained their cost of liquidity provision increases disproportionately relative to dealer-provided volume. As a result, the elasticity of dealers’ liquidity provision drops by at[…]
Author(s):Clemens Graf von Luckner, Carmen Reinhart, and Kenneth Rogoff Date:January 2023 Abstract: This paper employs high frequency transactions data on the world’s two oldest and most extensive centralized peer-to-peer Bitcoin markets, which enables trade in the currencies of more than 160 countries. We develop an algorithm that allows us, with high probability, to detect “crypto[…]
Author(s):Niall Ferguson, Martin Kornejew, Paul Schmelzing, and Moritz Schularick Date:January 2023 Abstract: This paper studies the evolution of central bank balance sheets over the past 400 years across 17 major economies. The size of central bank balance sheets has varied substantially over time relative to economic and financial activity. Major balance sheet expansions were initially[…]
Author(s):Linda S. Goldberg & Signe Krogstrup Date:January 2023 Abstract: The risk sensitivity of international capital flow pressures is explored using a new Exchange Market Pressure index that combines pressures observed in exchange rate adjustments with model-based estimates of incipient pressures that are masked by foreign exchange interventions and policy rate adjustments. The sensitivity of capital[…]
Author(s):Asli Demirguc-Kunt, Alvaro Pedraza, Fredy Pulga, and Claudia Ruiz-Ortega Date:December 2022 Abstract: What is the response of bank foreign subsidiaries to climate policy in their host countries? This paper finds that global banks with high environmental performance increase their presence in countries after local authorities strengthen their climate-related actions. Through their foreign subsidiaries, these banks[…]