Showing 1 - 10 of 340
We show that "zombie credit" - cheap credit to impaired firms - has a disinflationary effect. By helping distressed firms to stay afloat, such credit creates excess production capacity, thereby putting downward pressure on product prices. Granular European data on inflation, firms, and banks...
Persistent link: https://www.econbiz.de/10012391508
Before the era of large central bank balance sheets, banks relied on incoming payments to fund outgoing payments in order to conserve scarce liquidity. Even in the era of large central bank balance sheets, rather than funding payments with abundant reserve balances, we show that outgoing...
Persistent link: https://www.econbiz.de/10013465317
We study liquidity and systemic risk in high-value payment systems. Flows in high-value systems are characterized by high velocity, meaning that the total amount paid and received is high relative to the stock of reserves. In such systems, banks rely heavily on incoming funds to finance outgoing...
Persistent link: https://www.econbiz.de/10003781793
As the economic disruptions associated with the COVID-19 pandemic increased in March 2020, there was a global dash-for-cash by investors. This selling pressure occurred across advanced sovereign bond markets and caused a deterioration in market functioning, leading to central bank interventions....
Persistent link: https://www.econbiz.de/10013162110
Until 1935, Federal Reserve Banks from time to time purchased short-term securities directly from the United States Treasury to facilitate Treasury cash management operations. The authority to undertake such purchases provided a robust safety net that ensured Treasury could meet its obligations...
Persistent link: https://www.econbiz.de/10010404588
This paper uses U.S. loan-level credit register data and the 2018-2019 Trade War to test for the effects of international trade uncertainty on domestic credit supply. We exploit cross-sectional heterogeneity in banks' ex-ante exposure to trade uncertainty and find that an increase in trade...
Persistent link: https://www.econbiz.de/10014426248
This study provides evidence that shocks to the supply of trade finance have a causal effect on U.S. exports. The identification strategy exploits variation in the importance of banks as providers of letters of credit across countries. The larger a U.S. bank's share of the trade finance market...
Persistent link: https://www.econbiz.de/10010222887
Banks play a critical role in facilitating international trade by guaranteeing international payments and thereby reducing the risk of trade transactions. This paper uses banking data from the United States to document new empirical patterns regarding the use of letters of credit and similar...
Persistent link: https://www.econbiz.de/10010201328
This paper develops and tests a theoretical model that allows for the endogenous decision of banks to engage in international and global banking. International banking, where banks raise capital in the home market and lend it abroad, is driven by differences in factor endowments across...
Persistent link: https://www.econbiz.de/10009657663
Activities of international banks have been at the core of discussions on the causes and effects of the international financial crisis. Yet we know little about the actual magnitudes and mechanisms for transmission of liquidity shocks through international banks, including the reasons for...
Persistent link: https://www.econbiz.de/10010404142