EconPapers    
Economics at your fingertips  
 

Global Liquidity and Drivers of Cross-Border Bank Flows

Eugenio Cerutti, Stijn Claessens () and Lev Ratnovski ()

No 14/69, IMF Working Papers from International Monetary Fund

Abstract: This paper provides a definition of global liquidity consistent with its meaning as the “ease of financing” in international financial markets. Using a longer time series and broader sample of countries than in previous studies, it identifies global factors driving cross-border bank flows, alongside country-specific factors. It confirms the explanatory power of US financial conditions, with flows decreasing in market volatility (VIX) and term premia, and increasing in bank leverage, growth in domestic credit and M2. A new finding is that similar variables for other systemic countries – the UK and the Euro Area – are also important, sometimes even more so, consistent with the dominant role of European banks in cross-border banking. Furthermore, recipient country characteristics are found to affect not only the level of country-specific flows, but also the cyclical impact of global liquidity, with sensitivities of flows to banks decreasing with stronger macroeconomic frameworks and better bank regulation, but less so for flows to non-financial firms.

Keywords: Cross country analysis; Capital flows; Banks; Bank supervision; Bank regulations; Global liquidity; International financial markets; International banking; Liquidity; F21, F34, G15, G18, G21, G28, banking, bank claims, bank borrowers, International Lending and Debt Problems, Government Policy and Regulation, Government Policy and Regulation, Capital Flows., (search for similar items in EconPapers)
Pages: 33
Date: 2014-04-29
New Economics Papers: this item is included in nep-ban and nep-ifn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (36) Track citations by RSS feed

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=41511 (application/pdf)

Related works:
Working Paper: Global Liquidity and Drivers of Cross-Border Bank Flows (2014) Downloads
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:imf:imfwpa:14/69

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Jim Beardow ().

 
Page updated 2020-02-23
Handle: RePEc:imf:imfwpa:14/69