Capital flows and the risk-taking channel of monetary policy
Valentina Bruno and
Hyun Song Shin
Journal of Monetary Economics, 2015, vol. 71, issue C, 119-132
Adjustments in bank leverage act as the linchpin in the monetary transmission mechanism that works through fluctuations in risk-taking. In the international context, we find evidence of monetary policy spillovers on cross-border bank capital flows and the US dollar exchange rate through the banking sector. A contractionary shock to US monetary policy leads to a decrease in cross-border banking capital flows and a decline in the leverage of international banks. Such a decrease in bank capital flows is associated with an appreciation of the US dollar.
Keywords: Bank leverage; Monetary policy; Capital flows; Risk-taking channel (search for similar items in EconPapers)
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Working Paper: Capital Flows and the Risk-Taking Channel of Monetary Policy (2013)
Working Paper: Capital Flows and the Risk-Taking Channel of Monetary Policy (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:71:y:2015:i:c:p:119-132
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