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Local Banking Systems and Sensitivity of Capital Inflows to Global Factors

Author

Listed:
  • Satoshi Tobe

    () (Graduate School of Economics, Keio University)

Abstract

This article explores the interaction between capital inflows and global factors. A panel regression analysis covering 39 developed and emerging countries reveals that capital inflows into each country are closely associated with the leverage of the U.S. financial intermediaries, and more importantly, the effects of this leverage on capital inflows are non-linear: they are stronger in economies with larger deviations of the bank credit-to-GDP ratio. The results suggest that economies that are further in the expansionary phase of the financial cycle are more strongly exposed to spillover effects of the U.S. monetary policies because the leverage of the U.S. financial intermediaries is closely tied with federal fund rate shock

Suggested Citation

  • Satoshi Tobe, 2017. "Local Banking Systems and Sensitivity of Capital Inflows to Global Factors," Economics Bulletin, AccessEcon, vol. 37(3), pages 1861-1872.
  • Handle: RePEc:ebl:ecbull:eb-17-00547
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2017/Volume37/EB-17-V37-I3-P169.pdf
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    References listed on IDEAS

    as
    1. Forbes, Kristin J. & Warnock, Francis E., 2012. "Capital flow waves: Surges, stops, flight, and retrenchment," Journal of International Economics, Elsevier, vol. 88(2), pages 235-251.
    2. Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1996. "Inflows of Capital to Developing Countries in the 1990s," Journal of Economic Perspectives, American Economic Association, vol. 10(2), pages 123-139, Spring.
    3. Avdjiev, Stefan & Hardy, Bryan & Kalemli-Ozcan, Sebnem & Serv�n, Luis, 2017. "Gross Capital Inflows to Banks, Corporates and Sovereigns," CEPR Discussion Papers 11806, C.E.P.R. Discussion Papers.
    4. Jonathan Kearns & Nikhil Patel, 2016. "Does the financial channel of exchange rates offset the trade channel?," BIS Quarterly Review, Bank for International Settlements, December.
    5. repec:oup:ecpoli:v:32:y:2017:i:89:p:81-125. is not listed on IDEAS
    6. Robert N. McCauley & Patrick McGuire & Vladyslav Sushko, 2015. "Global dollar credit: links to US monetary policy and leverage," Economic Policy, CEPR;CES;MSH, vol. 30(82), pages 187-229.
    7. Miranda-Agrippino, Silvia & Rey, Hélène, 2015. "World Asset Markets and the Global Financial Cycle," CEPR Discussion Papers 10936, C.E.P.R. Discussion Papers.
    8. Stefan Avdjiev & Bryan Hardy & Sebnem Kalemli-Ozcan & Luis Servén, 2017. "Gross Capital Flows by Banks, Corporates and Sovereigns," NBER Working Papers 23116, National Bureau of Economic Research, Inc.
    9. Eugenio M Cerutti & Stijn Claessens & Damien Puy, 2015. "Push Factors and Capital Flows to Emerging Markets; Why Knowing Your Lender Matters More Than Fundamentals," IMF Working Papers 15/127, International Monetary Fund.
    10. Silvia Miranda-Agrippino & Hélène Rey, 2015. "US Monetary Policy and the Global Financial Cycle," NBER Working Papers 21722, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Gross capital inflows; Global factors; Credit cycle;

    JEL classification:

    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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