nep-ifn New Economics Papers
on International Finance
Issue of 2018‒07‒16
three papers chosen by
Vimal Balasubramaniam
University of Oxford

  1. The international transmission of monetary policy By Buch, Claudia M.; Bussiere, Matthieu; Goldberg, Linda; Hills, Robert
  2. Uncertainty and Cross-Border Banking Flows By Sangyup Choi; Davide Furceri
  3. Corporate Borrowing and Debt Maturity: The Effects of Market Access and Crises By Cortina, Juan José; Didier, Tatiana; Schmukler, Sergio

  1. By: Buch, Claudia M.; Bussiere, Matthieu; Goldberg, Linda; Hills, Robert
    Abstract: This paper presents the novel results from an internationally coordinated project by the International Banking Research Network (IBRN) on the cross-border transmission of conventional and unconventional monetary policy through banks. Teams from seventeen countries use confidential micro-banking data for the years 2000 through 2015 to explore the international transmission of monetary policies of the U.S., euro area, Japan, and United Kingdom. Two other studies use international data with different degrees of granularity. International spillovers into lending to the private sector do occur, especially for U.S. policies, and bank-specific heterogeneity influences the magnitudes of transmission. The effects are supportive of the international bank lending channel and the portfolio channel of monetary policy transmission. They also show that the frictions that banks face matter; in particular, foreign currency funding and hedging considerations can be a key source of heterogeneity. The forms of bank balance sheet heterogeneity that differentiate spillovers across banks are not uniform across countries. International spillovers into lending can be large for some banks, even while the average international spillovers of policies into nonbank lending generally are not large.
    Keywords: monetary policy,international spillovers,cross-border transmission,global bank,global financial cycle
    JEL: E52 F3 F4 G15 G21
    Date: 2018
  2. By: Sangyup Choi (Yonsei University); Davide Furceri (IMF)
    Abstract: While global uncertainty-measured by the VIX-has proven to be a robust global ¡°push¡± factor of international capital flows, there has been no systematic study assessing the role of uncertainty in driving bilateral capital flows. This paper tries to fill this gap in the literature by examining the effects of higher country-specific uncertainty on cross-border banking flows using data from the Bank for International Settlements Locational Banking Statistics. The bilateral structure of this data allows to disentangle supply factors from demand factors, thereby helping identify the effect of higher uncertainty on cross-border banking flows from other confounding factors. The results of this analysis suggest that: (i) uncertainty in a source country (domestic economy) is both a lender-specific push and pull factor that robustly predicts a decrease in outflows (cross-border lending) and inflows (crossborder borrowing); (ii) a decline in cross-border borrowing is larger than a decline in cross-border lending so that the net cross-border position of the banking sector increases; (iii) despite a decline in cross-border bank lending in the absolute sense, the share of cross-border bank lending in total bank lending increases, suggesting a portfolio rebalancing; (iv) this rebalancing occurs only when banks are lending to borrowers in advanced economies, not those in emerging market economies.
    Keywords: Uncertainty; Cross-border banking flows; Stops; Retrenchment; Portfolio rebalancing; Flight-to-safety.
    JEL: F21 F32 F42
    Date: 2018–07
  3. By: Cortina, Juan José; Didier, Tatiana; Schmukler, Sergio
    Abstract: This paper studies how access to different markets and crises impact debt financing and maturity. Using data on worldwide corporate issuance activity in domestic and international bond and syndicated loan markets during 1991-2014, the paper shows that these markets are affected differently by crises, while providing financing to different firms at distinct maturities. During the global financial crisis and domestic banking crises, large firms moved away from the crisis-hit markets toward less affected, longer-term ones, switching their financing sources. Hence, firms that switched markets compensated for the financing shocks and maintained, or increased, their borrowing maturity. Country-level maturities also remained stable or even lengthened. However, firms that did not move across markets typically experienced declining financing and shorter borrowing maturities. Firm movements across markets are consistent with credit tightening during crises due to supply-side shocks, significantly affecting debt composition, borrowing maturity, and credit redistribution across firms of different sizes.
    Keywords: borrowing maturity; capital raising; corporate bonds; debt markets; firm financing; global financial crisis (GFC); syndicated loans
    JEL: G00 G10 G32
    Date: 2018–06

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