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

Abstract: 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)
Date: 2013-05
New Economics Papers: this item is included in nep-ban, nep-ifn, nep-mon and nep-opm
Note: CF IFM
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Citations: View citations in EconPapers (92)

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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