Author(s): Iñaki Aldasoro, Sebastian Doerr, and Haonan Zhou Date: January 2022 Abstract: This paper provides first cross-country evidence on non-bank lending during crises. We show that non-banks contract their syndicated lending by over 50% more than banks during financial shocks in borrower countries. Establishing that non-banks serve riskier borrowers globally, we find that differences in[…]
Author(s): Alexander Plekhanov and Marta Skrzypińska Date: January 2022 Abstract: This paper sheds light on the effectiveness of policies addressing high non-performing loans (NPLs). Using data on ownership of subsidiaries of foreign banks in Emerging Europe, we first show that changes in NPLs of parent banks are associated with changes in NPLs of their foreign affiliates,[…]
Author(s): Stefan Avdjiev, and Maximilian Jager Date: January 2022 Abstract: We investigate the patterns and implications of bank opacity in Europe using a rich bank-level data set. Employing a novel event study methodology, we document that public data releases by the European Banking Authority (EBA) on banks’ exposures to individual countries and sectors contained information[…]
Author(s): Falko Fecht, Roman Inderst, Sebastian Pfeil Date: January 2022 Abstract: We offer a theory of the “boundary of the firm” tailored to banks as it builds on a single risk-shifting inefficiency and takes into account interbank lending, as an alternative to integration, and insured deposit financing. It explains why deeper economic integration should cause also[…]
Author(s): Anusha Chari, Karlye Dilts Stedman, Kristin Forbes Date: January 2022 Abstract: The effects of macroprudential policy on portfolio flows vary considerably across the global financial cycle. A tighter ex-ante macroprudential stance amplifies the impact of global risk shocks on bond and equity flows, increasing outflows significantly more during risk-off episodes and increasing inflows significantly more[…]
Author(s): Gyöngyi Lóránth, Anatoli Segura, Jing Zeng Date: January 2022 Abstract: We study supervisory interventions in cross-border banks under different institutional architectures in a model in which a bank may provide voluntary support to an impaired subsidiary using resources in a healthy subsidiary. While a supranational architecture permits voluntary support, a national architecture gives rise to[…]
Author(s): Ergys Islamaj, M. Ayhan Kose Date: November 2021 Abstract: Cross-border capital flows are expected to lead to increased international risk sharing by facilitating borrowing and lending in global financial markets. This paper examines risk-sharing outcomes of various types of capital flows (foreign direct investment, portfolio equity, debt, remittance, and aid flows) in a large[…]
Author(s): Javier Bianchi, Saki Bigio & Charles Engel Date: November 2021 Abstract: We develop a theory of exchange rate fluctuations arising from financial institutions’ demand for dollar liquid assets. Financial flows are unpredictable and may leave banks “scrambling for dollars.” Because of settlement frictions in interbank markets, a precautionary demand for dollar reserves emerges and[…]
Author(s): Emanuela Benincasa, Gazi Kabas, Steven Ongena Date: October 2021 Abstract: We provide evidence that banks increase cross-border lending in response to higher climate policy stringency in their home countries. Saturating with granular set of fixed effects and including a rich set of control variables, we show that the increase in cross-border lending is not driven[…]
Author(s): Sebastian Edwards Date: October 2021 Abstract: This paper deals with COVID and macroprudential regulations in emerging markets. I document the build-up of a sturdy macroprudential structure during 2009-2019, and the relaxation of regulations in 2020-2021, as part of the effort to deal with the sanitary emergency. I show that in every country, regulatory forbearance[…]