Author(s): Zafer Kanik Date: May 2022 Abstract: This paper revisits financial networks in a model of counterparty exposures, mandatory bail-ins and complementary bailouts. Under mandatory bail-ins, the network’s role is reshaped and beyond its previous contagion-related role, because counterparty obligations, in the first place, are used for bail-ins against idiosyncratic failures. Di- versification faces a[…]
Author(s): Leonardo Martinez, Francisco Roch, Francisco Roldán, Jeromin Zettelmeyer Date: June 2022 Abstract: This paper surveys the literature on sovereign debt from the perspective of understanding how sovereign debt differs from privately issue debt, and why sovereign debt is deemed safe in some countries but risky in others. The answers relate to the unique power of the sovereign.[…]
Author(s): Carlo Altavilla, Miguel Boucinha, Lorenzo Burlon, Mariassunta Giannetti, Julian Schumacher Date: May 2022 Abstract: Exploiting the introduction of the ECB’s tiering system for remunerating excess reserve holdings, we document the importance of the access to the money market for bank lending. We show that the two-tier system produced positive wealth effects for banks with[…]
Author(s): Xiang Fang, Bryan Hardy, Karen K Lewis Date: May 2022 Abstract: This paper studies the impact of investor composition on the sovereign debt market. We construct an aggregate data set of sovereign debt holdings by foreign and domestic bank, non-bank private, and official investors for 95 countries over twenty years. We find that private[…]
Author(s): Raphael Auer, Marc Farag, Ulf Lewrick, Lovrenc Orazem and Markus Zoss Date: May 2022 Abstract: The phenomenal growth of cryptocurrencies raises important questions about their footprint on the financial system. What role are traditional financial intermediaries playing in cryptocurrency markets and what drives their engagement? Are new nodes emerging? We help answer these questions[…]
Author(s): Javier Bianchi and Louphou Coulibaly Date: May 2022 Abstract: This paper studies the transmission channels of monetary and macroprudential policies in an open economy framework and evaluates the normative implications for international spillovers and global welfare. An analytical decomposition uncovers the prominent role of expenditure switching for monetary policy, while macroprudential policy operates primarily[…]
Author(s): Ralph De Haas, Sergei Guriev, Alexander Stepanov Date: May 2022 Abstract: Does state ownership hinder or help firms access credit? We use data on almost 4 million firms in 89 countries to study the relationship between state ownership and corporate leverage. Controlling for country-sector-year fixed effects and conventional firm-level determinants of leverage, we show[…]
Author(s): Stefan Avdjiev, Tsvetana Spasova Date: May 2022 Abstract: We conduct a comprehensive empirical investigation of the link between inequality and financial openness. We document that the relationship varies considerably not only over time, but also across the main components of total external liabilities, which have been largely overlooked by the existing literature. In emerging[…]
Author(s): Marc Flandreau, Stefano Pietrosanti, Carlotta E. Schuster Date: May 2022 Abstract: During the hypothecation “mania” of 1849-1875, many sovereign borrowers relied on the posting of collateral such as, famously, Peruvian guano. But in fact, such “securities” could not be repossessed. To explain the puzzling phenomenon of sovereign hypothecation, which has a long history before[…]
Author(s): Ozge Akinci, Ṣebnem Kalemli-Özcan, and Albert Queralto Date: May 2022 Abstract: Foreign investors’ changing appetite for risk-taking have been shown to be a key determinant of the global financial cycle. Such fluctuations in risk sentiment also correlate with the dynamics of UIP premia, capital flows, and exchange rates. To understand how these risk sentiment[…]