The Dollar, Bank Leverage, and Deviations from Covered Interest Parity
Stefan Avdjiev (),
Cathérine Koch and
Hyun Song Shin
Authors registered in the RePEc Author Service: Catherine Tahmee Casanova ()
American Economic Review: Insights, 2019, vol. 1, issue 2, 193-208
We document a triangular relationship in that a stronger dollar goes hand in hand with larger deviations from covered interest parity (CIP) and contractions of cross-border bank lending in dollars. We argue that underpinning the triangle is the role of the dollar as a key barometer of risk-taking capacity in global capital markets.
JEL-codes: F23 F31 G15 G21 (search for similar items in EconPapers)
Note: DOI: 10.1257/aeri.20180322
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Working Paper: The dollar, bank leverage and the deviation from covered interest parity (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:aea:aerins:v:1:y:2019:i:2:p:193-208
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