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The second wave of global liquidity: Why are firms acting like financial intermediaries?

Julian Caballero, Ugo Panizza and Andrew Powell

No 10926, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Recent work suggests that non-financial firms have acted like financial intermediaries particularly in emerging economies. We corroborate these findings but then ask why? Our results indicate evidence for carry-trade activities but focused in countries with higher levels of capital controls, particular controls on inflows. We find little evidence for such activities given other potential motives. We posit that this phenomenon is due more to the reaction to low global interest rates and strong capital inflows than to incomplete markets or the retreat of global banks due to impaired balance-sheets or tighter regulations.

Keywords: bond issuance; capital controls; carry-trade; corporate finance; currency mismatches (search for similar items in EconPapers)
JEL-codes: E51 F30 F33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ifn and nep-mac
Date: 2015-11
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Related works:
Working Paper: The Second Wave of Global Liquidity: Why Are Firms Acting Like Financial Intermediaries? (2016) Downloads
Working Paper: The second wave of global liquidity: Why are firms acting like financial intermediaries? (2015) Downloads
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