Capital Flows, Cross-Border Banking and Global Liquidity
Valentina Bruno and
Hyun Song Shin
No 19038, NBER Working Papers from National Bureau of Economic Research, Inc
We investigate global factors associated with cross-border capital flows. We formulate a model of gross capital flows through the international banking system and derive a closed form solution that highlights the leverage cycle of global banks as being a prime determinant of the transmission of financial conditions across borders. We then test the predictions of our model in a panel study of 46 countries and find that global factors dominate local factors as determinants of banking sector capital flows.
JEL-codes: F32 F34 F36 G21 (search for similar items in EconPapers)
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Published as Journal of Monetary Economics Volume 71, April 2015, Pages 119–132 Cover image Capital flows and the risk-taking channel of monetary policy Valentina Brunoa, Hyun Song Shinb, ,
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Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:19038
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