Author(s):Enrico Perotti, Edoardo D. Martino Date:February 2024 Abstract: The rapid escalation in uninsured deposit runs in March 2023 prompted calls for stronger ex-ante prudential measures, such as higher capital and liquidity norms, as well as an EU proposal aimed at increasing the use of the resolution process. This Policy Insight proposes a framework prioritising bank[…]
Author(s):Lina Lu, Marco Macchiavelli, Jonathan Wallen Date:December 2023 Abstract: We study the internal and external capital markets of large U.S. bank holding companies. Within the bank holding company, commercial bank and dealer divisions have different investment opportunities, raise capital externally and actively share some capital internally. We develop and test a simple model where a[…]
Author(s):Jonas Becker, Maik Schmeling, Andreas Schrimpf Date:January 2024 Abstract: We estimate the impact of banks’ cross-currency lending on exchange rates to shed light on the importance of flows as a major force affecting FX market outcomes. When non-US banks extend more loans in US dollars (USD) relative to US banks originating foreign currency-denominated loans, the[…]
Author(s):Carol Bertaut, Valentina Bruno, Hyun Song Shin Date:January 2024 Abstract: We highlight the role of duration and exchange rate risks on portfolio flows by using a unique and comprehensive database of US investor flows into emerging market government bonds denominated in local currency. Borrowing long-term mitigates roll-over risk but amplifies valuation changes that further interact[…]
Author(s):Jonas Becker, Maik Schmeling, Andreas Schrimpf Date:January 2024 Abstract: We estimate the impact of banks’ cross-currency lending on exchange rates to shed light on the importance of flows as a major force affecting FX market outcomes. When non-US banks extend more loans in US dollars (USD) relative to US banks originating foreign currency-denominated loans, the USD appreciates[…]
Author(s):Di Gong, Thomas Lambert, Wolf Wagner Date:November 2023 Abstract: This paper provides novel evidence for informational advantages of local bank supervision, outweighing biases due to the pursuit of local interests. For identification, we exploit a policy reform in China that moved supervision for a subset of bank branches from the national to the city level.[…]
Author(s):Karsten Müller & Emil Verner Date:June 2023 Abstract: We study the relationship between credit expansions, macroeconomic fluctuations, and financial crises using a novel database on the sectoral distribution of private credit for 117 countries since 1940. We document that, during credit booms, credit flows disproportionately to the non-tradable sector. Credit expansions to the non-tradable sector,[…]
Author(s):Yadav Gopalan, Joao Granja Date:September 2023 Abstract: We investigate how effective was bank supervision before, during, and after the monetary tightening of 2022. We find that bank supervisors were aware of the interest rate risks that were emerging in the banking system and began downgrading the ratings of banks with significant exposures to such risks[…]
Author(s):Sergio Florez-Orrego, Matteo Maggiori, Jesse Schreger, Ziwen Sun, Serdil Tinda Date:September 2023 Abstract: We survey the literature on global capital allocation. We begin by reviewing the rise of cross-border investment, the shift towards portfolio investment, and the literature focusing on aggregate patterns in multilateral and bilateral positions. We then turn to the recent literature that[…]
Author(s):Balduin Bippus, Simon Lloyd & Daniel Ostry Date:September 2023 Abstract: Using data on the external assets and liabilities of global banks based in the UK, the world’s largest centre for international banking, we identify exogenous cross-border banking flows by constructing novel granular instrumental variables. In line with the predictions of a new granular international banking[…]