Local Banking Systems and Sensitivity of Capital Inflows to Global Factors

Satoshi Tobe ()
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Satoshi Tobe: Graduate School of Economics, Keio University

Economics Bulletin, 2017, vol. 37, issue 3, 1861-1872

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

Keywords: Gross capital inflows; Global factors; Credit cycle (search for similar items in EconPapers)
JEL-codes: F3 F4 (search for similar items in EconPapers)
Date: 2017-08-31
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