|
on Financial Development and Growth |
| By: | Axel Durand Semboung (Université de Douala, Faculté des Sciences Économiques et Gestion Appliquée, Douala, Cameroun); Vatis Christian Kemezang (Université de Douala, Faculté des Sciences Économiques et Gestion Appliquée, Douala, Cameroun) |
| Abstract: | Migrant remittances constitute a major source of external financing in Sub Saharan Africa, yet the mechanisms through which they contribute to inclusive growth remain insufficiently established. This study examines their relationship with inclusive growth and identifies the main transmission channels. The analysis uses a balanced panel of 33 Sub Saharan African countries observed from 2000 to 2022, comprising 665 country year observations. Inclusive growth is measured using a composite index incorporating economic and social dimensions. The empirical strategy relies on multiple mediation analysis estimated through sequential regressions. The main equations are estimated by ordinary least squares with HC3 robust standard errors. Inference on indirect effects is based on 1, 000 country clustered bootstrap replications and 95% percentile confidence intervals. The results show a positive and statistically significant association between remittances and inclusive growth (β = 0.252, p < 0.01). Among the mechanisms examined, only productive investment exhibits a significant indirect effect. Human capital, financial development, and tax revenue do not significantly transmit this relationship. These findings show that the contribution of remittances to inclusive growth depends on the channel through which these resources affect the economy. They therefore highlight the need for policies that encourage the allocation of remittance inflows toward productive investment to strengthen their contribution to more inclusive and sustainable development. |
| Abstract: | Les transferts de fonds des migrants constituent une source majeure de financement extérieur en Afrique subsaharienne, mais les mécanismes par lesquels ils contribuent à la croissance inclusive restent insuffisamment établis. Cette étude analyse leur relation avec la croissance inclusive et identifie les principaux canaux de transmission. L'analyse porte sur un panel équilibré de 33 pays d'Afrique subsaharienne observés entre 2000 et 2022, soit 665 observations pays années. La croissance inclusive est mesurée à l'aide d'un indice composite intégrant des dimensions économiques et sociales. La stratégie empirique repose sur une analyse de médiation multiple par régressions séquentielles. Les équations principales sont estimées par moindres carrés ordinaires avec erreurs standards robustes HC3. L'inférence sur les effets indirects repose sur un bootstrap par grappes au niveau des pays comportant 1 000 réplications et des intervalles de confiance percentile à 95 %. Les résultats montrent une association positive et statistiquement significative entre les transferts de fonds et la croissance inclusive (β = 0, 252 ; p < 0, 01). Parmi les mécanismes examinés, seul l'investissement productif présente un effet indirect significatif. Le capital humain, le développement financier et les recettes fiscales ne transmettent pas significativement cette relation. Ces résultats montrent que la contribution des transferts à la croissance inclusive dépend du canal par lequel ces ressources affectent l'économie et soulignent la nécessité de politiques favorisant leur orientation vers des investissements productifs. |
| Keywords: | I32, Transferts de fonds, Croissance inclusive, M41, Sub-Saharan Africa Classification JEL : F24, M41 Remittances, C33, Investissement productif, O55, O15, Afrique subsaharienne. JEL Classification : F24, Sub-Saharan Africa Classification JEL : F24 O15 O55 I32 C33 M41, Human Capital, Productive Investment, Inclusive Growth, Afrique subsaharienne. JEL Classification : F24 O15 O55 I32 C33 M41 Remittances, Capital humain |
| Date: | 2026–07–10 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05689191 |
| By: | Benjamin A. Endriga (Bangko Sentral ng Pilipinas); Alyssa Cyrielle B. Villanueva (Bangko Sentral ng Pilipinas) |
| Abstract: | As a significant source of external funding for developing countries, international remittances have been widely studied for their impact on development in general, as well as their effects on economic growth, employment, foreign exchange, welfare, and poverty; and their links to consumption and investment. On poverty, two opposing views persist. The optimistic view holds that remittances reduce poverty by increasing incomes; supporting greater investment in physical assets, education, and health; and enabling access to a larger pool of knowledge. In contrast, the negative view observes that poor households have limited access to migrant labor markets due to liquidity constraints, as well as high transport and entry costs of migration. If migration is costly and risky, migrants may come from the middle or upper segments of the rural income distribution rather than from the poorest households. This study thus examines the impact of international remittances on poverty reduction in selected developing economies. It also examines whether human capital is a channel through which remittances can reduce poverty. The study employs dynamic panel techniques to estimate the results and address methodological issues of endogeneity and test for robustness. The study also uses three poverty indicators—(a)poverty headcount, (b) poverty gap, and (c) poverty severity—across three international poverty lines (US$3.00, US$4.20, and US$8.30) to capture the prevalence, depth, and intensity of poverty in the sample and to test for robustness. The results show that remittances are significant in reducing poverty using these different poverty measures. The findings also show that education, as proxy for human capital, has a moderating effect on remittances in reducing poverty. |
| JEL: | F24 I32 O15 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:bhd:dpaper:202518 |
| By: | Andrea Vismara; Rafael Prieto-Curiel; Rosie Hayward |
| Abstract: | In 2025, bilateral foreign aid was reduced by 23%, affecting more than 130 aid recipient countries. We assess whether debt service relief or remittance increases can match the USD 26 billion in aid losses. Using a network-shock model calibrated to bilateral donors' individual cuts, we estimate recipient-country aid losses and evaluate compensation feasibility in terms of annual debt service payments that would need to be cancelled and remittance capacity (the headroom between flows and a theoretical maximum in which every working-age migrant sends funds) mobilised to financially offset them. We find that 18% external debt service relief and 10% of remittance mobilisation could compensate half of the affected countries. However, some countries remain locked out of either or both mechanisms. A fundamental trade-off in the global financial architecture emerged for large aid-cut losers: countries positioned to benefit from debt service relief lack large international diaspora networks (limiting their capacity to increase remittances), while those with established diaspora channels face structural exclusion of traditional debt markets, rendering debt service relief ineffective. These insights introduce nuance in how alternative finance sources can replace foreign aid. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.21843 |
| By: | von Luckner, Clemens Graf; Horn, Sebastian; Kraay, Aart C.; Ramalho, Rita |
| Abstract: | This paper develops an empirical model to predict episodes of debt servicing difficulties (“debt distress”) in low-income countries, with three main contributions to the existing literature. First, it develops more refined measures of external debt distress episodes that allow timing the onset of distress episodes with increased precision. Second, it develops a systematic algorithm to comprehensively assess the out-of-sample predictive performance of more than 550, 000 candidate binary prediction models using J-K-fold cross-validation. Third, it tests whether more sophisticated machine learning algorithms can outperform simple probit models. The paper finds that simple single-equation probit models have better predictive power for debt distress than more sophisticated algorithms and are comparable in terms of predictive performance to important policy benchmarks such as the IMF and World Bank debt sustainability framework for low-income countries. |
| Date: | 2026–09–02 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11441 |
| By: | Clara Portela; Juan S. Mora-Sanguinetti |
| Abstract: | Recent advances combining sanctions scholarship and the study of authoritarianism relate sanctions effectiveness to regime type. These studies generally conclude that economic sanctions tend to be more effective on democracies than on autocracies, but also on weakly institutionalised autocracies rather than on other authoritarian types. This literature at the intersection between international relations and comparative politics focuses on the democracy-autocracy dichotomy, or the categorization of autocratic types, to the detriment of the exploration of ‘hybrid’ regime types. Equally importantly, it has neglected examining the impact of aid suspensions as a subcategory of sanctions. We address these deficits by investigating whether (i) the autocratic type or the level of democratic openness of the target better predicts sanctions effectiveness, (ii) whether hybrid regimes behave like closed autocracies or like democracies under sanctions, and (iii) whether aid suspensions perform similarly than other sanctions in terms of effectiveness. The hypotheses are tested on an original dataset rich in aid sanctions. |
| Keywords: | Foreign Aid; Aid Suspensions; Hybrid Regimes; Regime Types; Sanctions Economic; Autocracy |
| JEL: | F51 O19 F53 Z18 O55 F13 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:banfra:1056 |
| By: | Loukas Karabarbounis; Bruno Pellegrino; Juliana Salomao |
| Abstract: | We develop a general-equilibrium model of the global economy that integrates heterogeneous firms competing in product markets with countries that allocate capital around the world. Combining a hedonic demand system on the product side with a mean-variance portfolio system on the asset side, we obtain almost closed-form solutions for the equilibrium of the model. We use firm-level data on balance sheets, geographic breakdowns of revenue and employment, and business descriptions along with country-level data on bilateral equity holdings and trade costs to quantify the model to a cross section of roughly 23, 000 listed firms in 48 countries. We use the model to evaluate the reallocation and welfare effects of globalization. Both financial and trade liberalization concentrate activity among the largest firms and raise welfare, with gains being larger in emerging and mid-sized open economies respectively. Product- and capital-market frictions amplify each other, meaning that liberalizing one market reduces the gains from liberalizing the other. |
| JEL: | D2 F36 F60 G11 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35652 |
| By: | Bo Becker; Efraim Benmelech; Joao Monteiro |
| Abstract: | In 2008, the aggregate market value of U.S.-listed firms was roughly one-third higher than that of European-listed firms. By 2023, it was more than 300% higher, a difference of $34 trillion. The valuation gap is broad-based, rather than concentrated among a few superstar firms, and is driven by differences in firm values, not in the number of listed firms. Across sectors, the gap is larger in R&D-intensive industries and in industries with high returns to scale. European firms’ size is strongly correlated with home-country GDP, whereas U.S. firms’ size is unrelated to home-state GDP. Smaller European firms also face a particularly large cost-of-capital gap and do not appear able to substitute debt for limited access to equity financing, including venture capital. Taken together, these facts suggest that financial and product-market frictions constrain European firms’ ability to scale. |
| JEL: | G12 G15 G32 O36 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35577 |
| By: | Reyes Ortega, Santiago; Freeman, Kianna Rachael; Hernando Kaminsky, Pablo Daniel; Huber, Jeremias Luca; Mauro, Paolo |
| Abstract: | Venture capital is widely viewed as financing knowledge-intensive, R&D-driven startups, but owing to data constraints, this view has been based largely on high-income economies. By taking a global perspective, this paper documents that what venture capital finances differs systematically across economies, varying with institutional and business conditions rather than following a single model. Using a new cross-country dataset that harmonizes firm-level venture capital records with equity issuance data for more than 150 economies, the data shows that VC markets differ across countries not only in scale but in kind. Outside high-income countries, rather than being concentrated in knowledge intangibles, venture capital tilts–at both the sector and firm levels–toward organizational intangibles such as distribution, logistics, and payments. Highlighting the unique features of venture capital, this pattern is absent from public equity markets, where sectoral composition is far more similar across income levels. An accounting decomposition separates venture capital depth into the rate at which firms enter the market and the funding each entrant attracts, and entry accounts for the largest cross-country gaps. Moreover, the business environment is associated with VC primarily through entry, linked both to the size of the market and to the composition of what venture capital finances, the latter through entry into knowledge-intensive sectors in particular. |
| Date: | 2026–08–31 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11438 |
| By: | Federico, Giovanni; Incerpi, Andrea |
| Abstract: | Italy after its Unification in 1861 adopted a very aggressive policy of state-building funded by foreign capital. The GDP grew but Italy experienced a financial crisis which could have led to an Argentinian-style default. Italy had to let the lira float but succeeded to avoid default by adopting a prudent fiscal policy. Imports of capital dried up and the Italian economy stagnated until the end of the century. This paper analyses the causal relations between fiscal policies, imports of capital and economic performance with an open economy model. The short-term effects of the imports of capital on the real economy were small at best and the long run benefits of the post-Unification policies are questionable. |
| Keywords: | Italy; Economic policy; 19th century |
| JEL: | N13 N43 N73 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19287 |
| By: | Beniamino Pisicoli (University of Padua, Department of Economics and Management); Muhammad Usama Polani (Stanford University, Research Associate Stanford Institute for Economic Policy Research); Paolo Siciliani (Bank of England) |
| Abstract: | In this paper we investigate empirically whether having a domestic banking sector that lends more abroad is beneficial for the productivity of the domestic real economy. We investigate this question by using both cross-country/cross-sector and within-country/cross-firm panel data, thus providing aggregate and micro evidence. The analysis, that comprises the estimation of several OLS, system GMM, local projection and IV models, points to the beneficial role of a higher internationalisation of the domestic banking system on the productivity of the domestic economy. Results emerge both when using cross-country/cross-sector data from a panel of European economies, and when adopting a more granular approach by using UK firm and bank panel data. This effect is stronger when the domestic banking system lends more to firms in foreign advanced economies, is not limited to exporting firms, and is more pronounced during the early phase of a new banking relationship. In contrast, the inflow of lending from foreign banks does not result in productivity improvements for the domestic real economy. |
| Keywords: | Banks;international lending;productivity;TFP;financial openness |
| JEL: | G10 G1 G18 G21 O4 |
| Date: | 2026–04–10 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:023301 |
| By: | Shania Bhalotia (London School of Economics); Sophie Piton (Bank of England); John Woods (Bank of England) |
| Abstract: | Barriers to trade in services remain poorly understood. This paper investigates how regulatory barriers affect cross-border lending and deposit-taking by banks. Using confidential bank-level data from the Bank of England, we find that UK-resident banks substantially reduced lending to and deposit-taking from European Economic Area (EEA) countries after Brexit, with some effects observed after the referendum itself. Banks that lost the ability to provide services across the EEA without additional authorisation reduced their stocks of loans to and deposits from EEA countries by about 45% more than banks that did not have such authorisation when UK was a part of EU, relative to their activities with non-EEA countries. Moreover, banks with higher pre-referendum exposure to the EEA had lower lending and deposit-taking with the EEA after the referendum. We find limited evidence of multinational banks successfully circumventing the new barriers by using foreign affiliates. These results demonstrate the critical role of regulatory access in shaping the pattern of banking across borders and trade in services. |
| Keywords: | Trade in services;trade barriers;banking services;Brexit. |
| JEL: | F14 F23 G21 |
| Date: | 2026–05–08 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:023303 |
| By: | Juan Manuel Rodriguez Repeti (IIEP-UBA); Danilo Trupkin (UDESA) |
| Abstract: | This paper documents how inventory dynamics vary across levels of development and how they respond to real and financial shocks. Using a balanced panel of 72 small open economies over 1993–2022, spanning advanced to low-income economies, we show that inventories are strongly procyclical in advanced economies but become acyclical at lower income levels, while volatility and persistence rise as development declines. Using local projections, we estimate inventory responses to a long-run productivity shock and to a financial shock identified from the spread between U.S. corporate bond yields and Treasury yields. Productivity shocks generate temporary inventory accumulation across all groups, with smoother adjustment in advanced economies and more irregular cycles in emerging and developing economies. Financial shocks trigger decumulation followed by a rebound in higher-income groups, but a delayed, unreversed decline in low-income economies. |
| Keywords: | Inventories; Business Cycles; Productivity Shocks; Financial Shocks; Local Projections; Emerging Economies |
| JEL: | E22 E32 E44 F41 C33 O11 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:aoz:wpaper:405 |
| By: | Aurélien Espic |
| Abstract: | This paper examines how heterogeneous capital pledgeability shapes capital allocation. I first document, using French firm-level data, that firms holding more pledgeable capital are structurally more leveraged and display greater sensitivity of investment to credit supply shocks. I then incorporate heterogeneous capital pledgeability into a general equilibrium model with collateral constraints. This feature creates sectoral capital misallocation: high-pledgeability capital is less costly to accumulate and thus yields lower expected returns than low-pledgeability capital, both in steady state and in response to credit supply shocks. I estimate the model based on a simple distinction between commercial real estate and other types of capital goods, the former being more pledgeable. I then show that capital misallocation is substantial over the credit cycle. Because these capital goods are imperfect substitutes and firms face a unique interest rate, redistributive credit policies taxing debt issued by high-pledgeability firms while subsidizing that of less pledgeable firms raise welfare, particularly when implemented during a credit expansion. |
| Keywords: | Capital Pledgeability, Capital Misallocation, Credit Policies |
| JEL: | E44 E58 E61 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:banfra:1058 |
| By: | Federico D'Amario (Bank of England); Sebastian de-Ramon (Bank of England); William Francis (Bank of England) |
| Abstract: | Strong bank capitalisation provides long‑run financial‑stability benefits. However, transitioning to higher capital levels may involve short‑run costs. We analyse the effects of prudential capital changes on lending behaviour, macroeconomic outcomes, and banking competition using UK data within a structural VAR framework with sign and narrative restrictions. Narrative constraints draw on the UK regulator’s 2014–15 stress tests and the 2016 annual cyclical scenario. Impulse responses indicate that banks primarily adjust by reducing risk-weighted assets rather than raising new equity. Higher capital requirements entail negligible long-run costs, with modest short-run macroeconomic effects consistent with other VAR studies on bank capital. These impacts are driven by a contraction in lending and increase in spreads across sectors. We find that effects of altering prudential capital requirements are state dependent. Altering during recessions, as compared with expansions, amplifies short-run contractions, but these are more short-lived, with output recovering more quickly. Indicators of market power (Boone, HHI, Lerner) suggest that tighter capital requirements temporarily reduce banking competition. |
| Keywords: | Bayesian VAR models;narrative restrictions;financial stability;bank competition;state‑dependent local projections |
| JEL: | C11 C32 E32 G21 G28 |
| Date: | 2026–02–27 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:023294 |
| By: | José-Luis Peydró (LUISS University and EIEF); Francesc Rodriguez-Tous (Bayes Business School); Jagdish Tripathy (Bank of England); Arzu Uluc (Bank of England) |
| Abstract: | This paper provides an overview of evidence from a range of country-specific studies on the effectiveness of borrower-based macroprudential tools which limit household leverage at the borrower level. Most studies find these measures effective in breaking the self-enforcing loop between household leverage and house prices. These measures have beneficial effects in terms of lower defaults and less volatile house price dynamics during periods of economic distress. Their effects are heterogeneous across borrower types, with stronger impacts where leverage requirements are higher, such as among first-time buyers. Studies point to restrictions on household leverage having downstream effects on job search, location choice, homeownership, and exposure to income shocks. Looking ahead, further research is required to conduct a comprehensive cost-benefit analysis of these measures, to adapt them to increased use of technology in financial intermediation, and to examine their broader societal effects, including political outcomes and mental health. |
| Keywords: | Macroprudential policy;borrower-based tools;distributional consequences;financial stability;wealth inequality. |
| JEL: | E58 G01 G21 G51 R2 |
| Date: | 2025–10–31 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:023273 |
| By: | Tomohiro Hirano; Keiichi Kishi; Alexis Akira Toda |
| Abstract: | We develop a macro-finance model linking stock price bubbles to a general-purpose technology (GPT), such as information technology and artificial intelligence. Knowledge spillovers differ across production factors, generating unbalanced growth and causing stock prices to outgrow dividends. Under our conditions, the unique equilibrium contains a bubble on dividend-paying stocks even though agents share common beliefs and rationally anticipate its collapse. The probability that spillovers persist affects the bubbles duration but not its existence. When spillovers equalize as the technology matures, the economy reaches balanced growth and the bubble collapses. Through IPO proceeds, the bubble can increase R&D employment, while accumulated knowledge remains productive afterward. More broadly, balanced growth is a knife-edge property: the restrictions used to obtain it make stock prices and dividends grow at the same rate, thereby ruling out rational bubbles on dividend-paying assets by construction. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:cnn:wpaper:26-013e |
| By: | Ruslana Datsenko (Bank of England); Martin B Holm (University of Oslo and CEPR) |
| Abstract: | Monetary policy is usually evaluated through aggregate output and inflation, with less attention to how it reallocates innovative investment across firms. Existing evidence shows that higher rates reduce innovation, but the firms driving this response remain unclear. Combining Norway’s research and development (R&D) survey with administrative data and narrative monetary shocks for 2001–18, we estimate heterogeneous firm responses. Contractionary policy reduces R&D most in high-growth firms with recent equity issuance, consistent with the asset-price channel of monetary transmission. Standard debt-based measures explain little heterogeneity. Monetary policy therefore has long-run real effects primarily by reducing R&D in high-growth innovative firms. |
| Keywords: | Monetary policy;innovation;productivity;research and development |
| JEL: | E52 O31 |
| Date: | 2026–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:023314 |
| By: | Vlaicu, Razvan |
| Abstract: | This paper reviews the impact evaluation evidence on how expanding formal credit affects small and medium enterprise (SME) performance, focusing on developing countries, particularly Latin America, while using evidence from advanced economies to sharpen mechanisms and external validity. Across the core evidence base, the meta-analytic mean effects of formal loans are economically meaningful: employment rises by about 12% on average, sales by about 18%, and profits by about 18%, albeit with substantial heterogeneity across settings, programs, and outcome horizons. The effects are larger in some large-scale public interventions and in programs explicitly targeting constrained firms but smaller or statistically indistinguishable from zero in others. Taken together, the evidence supports the view that relaxing financial constraints can raise SME scale and performance, but it also underscores that credit expansions are not automatically welfare improving, can create distributional and competitive spillovers, and are sensitive to program design, targeting, and local financial architecture. |
| Keywords: | credit access;SME performance;Developing countires |
| JEL: | E22 E24 E50 G21 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14711 |
| By: | Yusuf Emre Akgunduz; Kubra Bolukbas; Mehmet Selman Colak; Merve Demirbas Ozbekler; Muhammed Hasan Yilmaz |
| Abstract: | This paper investigates the impact of banks’ medium-term inflation expectations on credit supply in a major emerging market. Theoretically, higher inflation expectations can either expand credit via the Fisher effect or contract it through a risk premium channel. By linking novel survey data on banks’ macroeconomic expectations with micro-level credit records in Türkiye (2009–2019), our findings suggest that the risk-premium channel dominates. Within-firm estimations show that an increase in a bank’s inflation expectation leads to a contraction in domestic currency credit supply. These results are robust to instrumental-variable estimations and an event-study design centered on the 2018 exchange rate shock. Beyond credit volumes, higher expectations lead to elevated interest rates and tighter collateral requirements. This contraction is most pronounced for small, highly leveraged, and domestically focused firms, with adverse spillovers to investment, productivity, and export performance via firm-bank relationships. |
| Keywords: | Inflation expectations, Bank behavior, Credit supply |
| JEL: | G21 E31 D84 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:tcb:wpaper:2616 |
| By: | Mohammad Ghaderi; Sébastien Plante; Nikolai Roussanov; Sang Byung Seo |
| Abstract: | Do corporate bond investors earn compensation for bearing credit risk? We construct a new historical corporate bond database spanning 128 years to estimate a corporate bond counterpart to the equity risk premium. Combining hand-collected archival data with modern sources, we assemble a panel of over 100, 000 bonds and 7 million observations. While recent samples suggest corporate bond excess returns largely reflect the term premium, our long sample reveals a sizable and statistically significant credit risk premium. Credit spreads predict future corporate bond returns and macroeconomic aggregates, though their ability to forecast business cycle fluctuations weakens when prewar data are included. |
| JEL: | G1 G12 N21 N22 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35578 |
| By: | Esteves, Rui; Tuncer, Ali Coskun |
| Abstract: | Contemporaries and historians agree that British colonies did not borrow on their own credit but on imperial fiat. We explore the history of colonial bonds explicitly guaranteed by Britain to qualify this assertion. We find that markets priced guarantees above other colonial bonds and that colonial governments lobbied for them. The introduction of other regulatory enhancements reduced the value of guarantees in the late 19th century, but it recovered in the interwar. British authorities were ambivalent about guarantees—worrying about creating moral hazard while using guarantees to lower the costs of developmental and strategic projects in the colonies. |
| Keywords: | Loan guarantees |
| JEL: | F54 H81 N20 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19267 |
| By: | Flores Zendejas, Juan; Nodari, Gianandrea |
| Abstract: | This article explores how profit-seeking behavior among central banks shaped their adherence to the gold exchange standard during the interwar period, focusing on the case of Chile. Existing literature has emphasized ideology, credibility, and political considerations to explain monetary orthodoxy. However, it has largely overlooked the role of financial incentives embedded in the structure of the gold exchange regime. Drawing on new archival evidence, particularly the minutes of the Central Bank of Chile’s Board of Directors, we show that the institution actively managed its foreign reserves to maximize returns by placing them in correspondent banks in London and New York. This proactive strategy was encouraged by institutional design and shareholder expectations but created vulnerabilities by reducing reserve liquidity and increasing exposure to currency and counterparty risk. These fragilities became evident during the sterling crisis of 1931, when Chile incurred severe losses and was unable to act as a lender of last resort, leading to its abandonment of the gold standard in 1932. The Chilean case reflects broader practices among European and Latin American central banks, revealing how profitability considerations shaped monetary behavior and contributed to systemic fragility. |
| JEL: | E58 F33 N16 N26 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:gnv:wpaper:unige:195486 |
| By: | Michael D. Bordo; Cécile Bastidon |
| Abstract: | We propose stress tests based on an original International Monetary System (IMS) model with regime switchings. The model is calibrated for nine reference currencies from the beginning of the Classical Gold Standard to the present. Regime switchings in currency dominance are related to combinations of conditions on a multidimensional environment variable that includes five classes of shocks: technology; development; monetary, financial and fiscal institutions; democracy and conflicts; and the regulatory environment. We provide an original database of events for these five classes of shocks, which is used for calibration. The calibration highlights the important role of the democracy and conflicts component in regime switchings. The calibrated model is then used to perform stress tests on the current prospects of currency dominance for a broad set of scenarios. A salient result from the scenarios we tested is that the dominance of the US dollar is at most marginally affected. No other currency emerges as a major player, suggesting strong inertia in the system’s current centripetal dynamics. |
| JEL: | C3 C82 E42 F33 G15 N2 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35647 |
| By: | Mathilde Dufouleur |
| Abstract: | This paper examines the effects of cryptocurrency regulation on price deviations in the Bitcoin market, focusing on regulatory implementations rather than announcements. I construct a unique database of regulations across 28 countries since 2009, categorized into seven types, and analyse Bitcoin price data since September 2013. Our findings indicate that the Law of One Price does not hold in the Bitcoin market. Contrary to initial conjectures, more regulated markets exhibit higher price convergence with the USD benchmark. According to the type of regulation, this result is mixed. Regulations enhancing reliability and transparency, such as the expansion of securities laws, banking and payment regulations, and the implementation of regulatory sandboxes foster price convergence. In contrast, partial bans—primarily targeting banks—exacerbate price divergence, underscoring the significant role of financial institutions in the Bitcoin market. Additionally, anti-money laundering/countering the financing of terrorism (AML/CFT) laws reduce local prices regardless of USD price level, suggesting the cryptoasset's use in illicit activities.. |
| Keywords: | Cryptocurrency, Cryptocurrency Regulation, Price Convergence, Law of One Price, Financial Institutions, Anti-Money Laundering, Regulatory Impact |
| JEL: | G15 G18 E42 K22 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:banfra:1052 |
| By: | Sami Es-snibi; Mehdi Guelmamen |
| Abstract: | We ask whether high-frequency political communication shapes the level of conditional volatility, its persistence, or the probability of transiting between volatility states. The question is addressed with hourly Bitcoin prices and the universe of Donald Trump’s social media posts from August 2017 to February 2026, scoring the directional tone of market-relevant posts and entering it as an exogenous regressor in single-regime and Markov-switching variance equations. Three results follow. First, the tone coefficient is recovered only in log-linear specifications, where more positive communication coincides with lower conditional volatility and adversarial communication with higher volatility; additive specifications place the estimate at the boundary of the admissible parameter space. Second, a two-state Markov-switching EGARCH identifies a calm and a turbulent state with expected durations of eight and four hours, so that regime alternation is an intraday phenomenon that daily aggregation cannot resolve. Third, the tone effect is proportionally identical across the two states, and a fourteen-month interruption in communication leaves regime alternation essentially unchanged. Political communication thus modulates volatility intensity within whichever state prevails, without governing transitions between states. |
| Keywords: | Political communication; cryptocurrency volatility; sentiment analysis; Markovswitching GARCH; regime transitions; high-frequency data |
| JEL: | C58 E44 G15 G17 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ulp:sbbeta:2026-27 |