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Inflation and financial market performance: what have we learned in the last ten years

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  • John Boyd
  • Bruce Champ

Abstract

The last decade has witnessed a great deal of theoretical and empirical research on the relationships between inflation, financial market performance, and economic growth. This paper provides a survey of that literature and presents new cross-country empirical results on this topic. We find that inflation is negatively associated with banking industry size, real returns on financial assets, and bank profitability. We also discover a positive relationship between asset return volatility and inflation.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Cleveland in its series Working Paper with number 0317.

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Date of creation: 2003
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Handle: RePEc:fip:fedcwp:0317

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Cited by:
  1. Ricardo Schechtman & Wagner Piazza Gaglianone, 2011. "Macro Stress Testing of Credit Risk Focused on the Tails," Working Papers Series 241, Central Bank of Brazil, Research Department.
  2. Berentsen, Aleksander & Rojas Breu, Mariana & Shi, Shouyong, 2012. "Liquidity, innovation and growth," Journal of Monetary Economics, Elsevier, vol. 59(8), pages 721-737.
  3. Rupa Duttagupta & Paul Cashin, 2008. "The Anatomy of Banking Crises," IMF Working Papers 08/93, International Monetary Fund.
  4. Andrea Amaral & Margarida Abreu & Victor Mendes, 2010. "Contagion in Banking Crises: A Spatial Probit Model," Working Papers Department of Economics 2010/03, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
  5. Satti, Saqlain Latif & Shahbaz, Muhammad & Mujahid, Nooreen & Ali, Amjad, 2013. "Impact of Financial Development and Globalization on Inflation: The Role of Remittance and Economic Growth in Bangladesh," MPRA Paper 51675, University Library of Munich, Germany, revised 21 Nov 2013.
  6. Mei Dong, 2009. "Money and Costly Credit," 2009 Meeting Papers 404, Society for Economic Dynamics.
  7. Gabriel Jiménez & Steven Ongena & José Luis Peydró & Jesús Saurina, 2009. "Hazardous times for monetary policy: What do twenty-three million bank loans say about the effects of monetary policy on credit risk-taking?," Banco de Espa�a Working Papers 0833, Banco de Espa�a.
  8. Alimi, R. Santos, 2014. "Inflation and Financial Sector Performance: The Case Of Nigeria," MPRA Paper 57180, University Library of Munich, Germany.
  9. Randall Wright & Lixin Huang & Ping He, 2008. "Money, Banking, and Monetary Policy," 2008 Meeting Papers 347, Society for Economic Dynamics.
  10. Abu N. M. Wahid & Muhammad Shahbaz & Pervaz Azim, 2011. "Inflation and Financial Sector Correlation: The Case of Bangladesh," International Journal of Economics and Financial Issues, Econjournals, vol. 1(4), pages 145-152.

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