Financial Globalization And The International Transmission Of Interest Rate Shocks
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Financial Globalization And The International Transmission Of Interest Rate Shocks
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Author : Xiaoli Wan
language : en
Publisher:
Release Date : 2017
Financial Globalization And The International Transmission Of Interest Rate Shocks written by Xiaoli Wan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
This paper evaluates the spillovers from U.S. monetary policy to China's domestic interest rates over 1999-2016, focusing on the impacts of long-term interest rate and exchange rate regimes on the capacity of China to moderate external interest rate shocks. We find that China's central bank owns some extent of autonomy as it has a significant preference to control inflation and stimulate the economy even beyond the potential growth. However, China's interest rates are significantly impacted by U.S. monetary policy especially after the crisis. The transmission from U.S. interest rates to China at the long-end even exists before the crisis, but only for the positive change of U.S. interest rates. The comparison with New Zealand's experience provides some evidence that central banks are more likely facing a "monetary dilemma" and China's fixed exchange rate regime with capital controls might help to mitigate the spillovers of external monetary shocks in a turmoil period.
Financial Globalization And Monetary Policy
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Author : Steven B. Kamin
language : en
Publisher: DIANE Publishing
Release Date : 2011-05
Financial Globalization And Monetary Policy written by Steven B. Kamin and has been published by DIANE Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011-05 with Business & Economics categories.
Reviews the available evidence and previous research on potential effects of financial globalization, that is, the international integration of financial markets. Central banks with floating currencies retain the ability to independently determine short-term interest rates and thus influence broader financial conditions and macro-economic performance in their economies. However, domestic financial conditions appear to have become more vulnerable to a wide range of external shocks, complicating the task of making appropriate monetary policy decisions. Moreover, the financial crisis has highlighted the importance of cross-border channels for the transmission of liquidity and credit shocks. Charts and tables. This is a print on demand report.
Financial Globalization Shadow Banking And Interest Rate Transmission
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Author : Xiaoli Wan
language : en
Publisher:
Release Date : 2021
Financial Globalization Shadow Banking And Interest Rate Transmission written by Xiaoli Wan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021 with categories.
Many long-held views about the global financial system and the effectiveness of monetary policy have been questioned since the Global Financial Crisis (GFC) of 2007/2009. At stake is the capacity of monetary authorities to isolate international monetary policy shocks under financial globalization coupled with the rapid development of shadow banking and its impact on the banking system and monetary policy transmission. This thesis comprises three empirical studies to examine these issues by providing evidence from China. The first study investigates the international transmission of monetary policy from the U.S. to China. The results show that the spillover effects of U.S. monetary policy are significant and strong on China's short-term interest rates after the GFC. The spillover at the long-end of the yield curve even holds before the GFC, but only for positive changes in U.S. long-term interest rates. By comparing the results with countries under flexible exchange rates such as New Zealand, I find a fixed exchange rate regime with capital controls helps to mitigate more effectively external monetary shocks especially during a turmoil period. The second study shifts the focus on the driving forces of the rise of shadow banking in China. Aside from micro arbitrage factors suggested by previous literature, I paid specific attention to a wide range of macro-finance factors. To reflect the unique institutional features that shape macroeconomic policy making in China, I introduce a novel identification strategy to isolate pure monetary policy shocks from the influence of other macroeconomic policy variations. The empirical results show robustly that China's shadow banking is essentially driven by macro-policy factors including credit scale tightening, strengthened risky-loan regulation, and intensified interest-rate repression. In contrast, the effect of a pure monetary contraction is to reduce shadow banking, due to an economy-wide tightening of liquidity. The third essay investigates how shadow banking impacts loan pricing and the pass-through from policy rates to retail lending rates. The results show that the yield of shadow banking products impacts the lending rates positively, in which 20 percent of the impact takes effect through the deposit channel. The scale of shadow banking wealth management products (WMPs) does not significantly impact lending rates. Furthermore, the rise in shadow banking appears to have decreased the pass-through from benchmark policy rates to lending rates after 2013 by providing alternative credit options to bank loans, supporting the loan-demand side view. On the other hand, I find the effect of shadow banking on the pass-through from market-based short-term policy rates to lending rates became insignificant after 2013 as the arbitrage model shifted from the WMP-channel-shadow credit to interbank-entrustment-securities. However, China's shadow banking appears to have significantly decreased net interest margins of banks after 2013 as the average return on financial securities invested by shadow banking is lower than on-balance loan yields.
Globalization And Changing Patterns In The International Transmission Of Shocks In Financial Markets
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Author : Michael D. Bordo
language : en
Publisher:
Release Date : 2002
Globalization And Changing Patterns In The International Transmission Of Shocks In Financial Markets written by Michael D. Bordo and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002 with Economics categories.
In this paper we compare various characteristics of the cross-country transmission of shocks in the financial markets of both advanced and emerging countries during two periods of globalization -- the pre-World War I classical gold standard era, 1880-1914, and the post-Bretton Woods era, 1975-2000. Based on principal components analysis on monthly spreads on long-term sovereign bond yields and on an EMP measure of currency crises, an index of global stress, and impulse response functions from VARs estimated using weekly data on short-term interest rates, we conclude that financial market shocks were more globalized before 1914 compared to the present. We postulate that this difference in systemic stability between the two eras of globalization reflects factors such as strong cross-country interdependence fostered through links to gold, the growing financial maturity of advanced countries, and the widening of the center to include a more diverse group of countries spanning several regions.
Essays In International Money And Finance
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Author : James R Lothian
language : en
Publisher: World Scientific
Release Date : 2017-06-29
Essays In International Money And Finance written by James R Lothian and has been published by World Scientific this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-06-29 with Business & Economics categories.
The aim of the book is to make the author's scholarly research in the areas of international finance and monetary economics easily accessible to other researchers and students. The articles included in the book span a wide range. The topics include the behavior of the three key relations in international finance, purchasing power parity, interest rate parity and real interest rate equality, the relation between money and other key economic variables, financial globalization and the transmission of economic disturbances internationally.
Financial Globalization And Monetary Policy
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Author : Steven B. Kamin
language : en
Publisher:
Release Date : 2015
Financial Globalization And Monetary Policy written by Steven B. Kamin and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
This paper reviews the available evidence and previous research on potential effects of financial globalization, that is, the international integration of financial markets. In particular, we address the questions: Has financial globalization materially increased the influence of external developments on domestic monetary conditions? And, has it reduced the influence of central banks over financial and economic conditions in their own country? We find that central banks with floating currencies retain the ability to independently determine short-term interest rates and thus influence broader financial conditions and macroeconomic performance in their economies. However, domestic financial conditions appear to have become more vulnerable to a wide range of external shocks, complicating the task of making appropriate monetary policy decisions. Moreover, the financial crisis has highlighted the importance of cross-border channels for the transmission of liquidity and credit shocks. With financial transactions increasingly being undertaken in vehicle currencies such as dollars and euros, the liquidity provision and the lender-of-last resort functions of many central banks are being challenged. Accordingly, international arrangements for liquidity provision may become increasingly important in the future.
Globalization Of Financial Markets And Implications For Pacific Basin Developing Countries
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Author : David Goldsbrough
language : en
Publisher:
Release Date : 1991
Globalization Of Financial Markets And Implications For Pacific Basin Developing Countries written by David Goldsbrough and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1991 with Capital market categories.
Monetary Policy Transmission In Emerging Asia
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Author : Nasha Ananchotikul
language : en
Publisher: International Monetary Fund
Release Date : 2015-09-28
Monetary Policy Transmission In Emerging Asia written by Nasha Ananchotikul and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015-09-28 with Business & Economics categories.
Given the heavy reliance on bank lending as the main source of financing in most Asian economies, banks could potentially play a pivotal role in monetary policy transmission. However, we find that Asia’s bank lending channel or, more broadly, credit channel of domestic monetary policy is not very strong at the aggregate level. Using bank-level data for nine Asian economies during 2000–2013, we show that heterogeneity of bank characteristics (e.g., ownership type, financial position), degree of foreign bank penetration of the domestic banking sector, and global financial conditions all have a bearing on the response of domestic credit to changes in domestic monetary policy, and may account for the apparently weak credit channel at aggregate level.
Financial Globalization And Monetary Policy
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Author : Michael B. Devereux
language : en
Publisher: International Monetary Fund
Release Date : 2007-07
Financial Globalization And Monetary Policy written by Michael B. Devereux and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007-07 with Business & Economics categories.
What does financial globalization imply for the design of monetary policy? Does the case for price stability change in an environment of large cross country gross asset holdings?. This paper is concerned with the effects of monetary policy under endogenous international portfolio choice and incomplete markets. With endogenous portfolios, monetary policy takes on new importance due to its impact on the distribution of returns on nominal assets. Surprisingly, we find an even stronger case for price stability in this environment. Even without nominal rigidities, price stability has a welfare benefit by enhancing the risk sharing capacity of nominal bond returns.
Monetary Policy Transmission In Emerging Markets And Developing Economies
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Author : Mr.Luis Brandao-Marques
language : en
Publisher: International Monetary Fund
Release Date : 2020-02-21
Monetary Policy Transmission In Emerging Markets And Developing Economies written by Mr.Luis Brandao-Marques and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-02-21 with Business & Economics categories.
Central banks in emerging and developing economies (EMDEs) have been modernizing their monetary policy frameworks, often moving toward inflation targeting (IT). However, questions regarding the strength of monetary policy transmission from interest rates to inflation and output have often stalled progress. We conduct a novel empirical analysis using Jordà’s (2005) approach for 40 EMDEs to shed a light on monetary transmission in these countries. We find that interest rate hikes reduce output growth and inflation, once we explicitly account for the behavior of the exchange rate. Having a modern monetary policy framework—adopting IT and independent and transparent central banks—matters more for monetary transmission than financial development.
