TY  - GEN
AB  - The literature on drivers of capital flows stresses the prominent role of global financial factors. Recent empirical work, however, highlights how this role varies across countries and time, and this heterogeneity is not well understood. We revisit this question by focusing on financial intermediaries' funding flows in different currencies. A portfolio model shows that the sign and magnitude of the response of foreign currency funding flows to global risk factors depend on the financial intermediary's pre-existing currency exposure. Analysis of data on European banks' aggregate balance sheets lends support to the model predictions, especially in countries outside the euro area.
AU  - Krogstrup, Signe
AU  - Tille, Cédric
CY  - Geneva
DA  - 2018
DA  - 2018
DO  - 10.71609/iheid-v5zc-nt37
DO  - doi
ID  - 296015
L1  - https://repository.graduateinstitute.ch/record/296015/files/HEIDWP09-2018.pdf
L2  - https://repository.graduateinstitute.ch/record/296015/files/HEIDWP09-2018.pdf
L4  - https://repository.graduateinstitute.ch/record/296015/files/HEIDWP09-2018.pdf
LK  - https://repository.graduateinstitute.ch/record/296015/files/HEIDWP09-2018.pdf
N2  - The literature on drivers of capital flows stresses the prominent role of global financial factors. Recent empirical work, however, highlights how this role varies across countries and time, and this heterogeneity is not well understood. We revisit this question by focusing on financial intermediaries' funding flows in different currencies. A portfolio model shows that the sign and magnitude of the response of foreign currency funding flows to global risk factors depend on the financial intermediary's pre-existing currency exposure. Analysis of data on European banks' aggregate balance sheets lends support to the model predictions, especially in countries outside the euro area.
PB  - Graduate Institute of International and Development Studies, International Economics Department
PP  - Geneva
PY  - 2018
PY  - 2018
T1  - Foreign currency bank funding and global factors
TI  - Foreign currency bank funding and global factors
UR  - https://repository.graduateinstitute.ch/record/296015/files/HEIDWP09-2018.pdf
Y1  - 2018
ER  -