nep-ifn New Economics Papers
on International Finance
Issue of 2018‒10‒08
two papers chosen by
Vimal Balasubramaniam
University of Oxford

  1. What drives local lending by global banks? By Stefan Avdjiev; Uluc Aysun; Ralf Hepp
  2. ECB spillovers and domestic monetary policy effectiveness in small open economies By Saskia Ter Ellen; Edvard Jansen; Nina Larsson Midthjell

  1. By: Stefan Avdjiev; Uluc Aysun; Ralf Hepp
    Abstract: We find that the lending behavior of global banks' subsidiaries throughout the world is more closely related to local macroeconomic conditions and their financial conditions than to those of their owner-specific counterparts. This inference is drawn from a panel dataset populated with bank-level observations from the Bankscope database. Using this database, we identify ownership structures and incorporate them into a unique methodology that identifies and compares the owner and subsidiary-specific determinants of lending. A distinctive feature of our analysis is that we use multi-dimensional country-level data from the BIS international banking statistics to account for exchange rate fluctuations and cross-border lending.
    Keywords: bankscope, G-SIB, bank-level data, global banks, BIS international banking statistics
    JEL: E44 F32 G15 G21
    Date: 2018–09
  2. By: Saskia Ter Ellen (Norges Bank); Edvard Jansen (Formuesforvaltning); Nina Larsson Midthjell (Norges Bank)
    Abstract: In this paper we study financial spillovers from the European Central Bank's (ECB) monetary policy and communication, and whether they have consequences for the effectiveness of domestic monetary policy of small open economies. Recent work suggests that the "trilemma" in international economics as we used to know it, is actually a dilemma: small open economies with floating exchange rate regimes can only have independent monetary policies when the capital account is managed. Our findings show that domestic monetary policy is still effective, but that spillover effects, particularly from the ECB's communication, reduce domestic control over the longer end of the yield curve.
    Keywords: monetary policy, forward guidance, international spillovers, asset prices, small open economies
    JEL: E43 E44 E52 E58 G12
    Date: 2018–09–25

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