On the roles of different foreign currencies in European bank lending

Signe Krogstrup and Cédric Tille

No 17-2015, IHEID Working Papers from Economics Section, The Graduate Institute of International Studies

Abstract: We draw on a new data set on the use of Swiss francs and other currencies by European banks to assess the patterns of foreign currency bank lending. We show that the patterns differ sharply across foreign currencies. The Swiss franc is used predominantly for lending to residents, especially households. It is sensitive to the interest rate differential, exchange rate developments, funding availability, and to some extent international trade. Lending in other currencies is more used in lending to resident nonfinancial firms, and mostly in cross-border lending, where it is sensitive to funding costs and trade. Policy measures aimed at foreign currency lending have a clear impact on lending to residents. Our analysis shows that not all foreign currencies are alike, and that any policy aimed at the use of foreign currencies needs to take this heterogeneity into account.

Keywords: Swiss franc lending; foreign currency lending; cross-border transmission of shocks; European bank balance sheets. (search for similar items in EconPapers)
JEL-codes: F32 F34 F36 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2015-06-31, Revised 2015-08-31
New Economics Papers: this item is included in nep-ban
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://repec.graduateinstitute.ch/pdfs/Working_papers/HEIDWP17-2015.pdf (application/pdf)

Related works:
Working Paper: On the roles of different foreign currencies in European bank lending (2016)
Working Paper: On the Roles of Different Foreign Currencies in European Bank Lending (2015)
Working Paper: On the roles of different foreign currencies in European bank lending (2015)
Working Paper: On the roles of different foreign currencies in European bank lending (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gii:giihei:heidwp17-2015

Access Statistics for this paper

More papers in IHEID Working Papers from Economics Section, The Graduate Institute of International Studies Contact information at EDIRC.
Bibliographic data for series maintained by Dorina Dobre ().