This book covers many aspects of excessive expansion of cross-border capital flows underlying the global financial crises that occurred in succession in the form of the subprime mortgage crisis, the collapse of Lehman Brothers, and the European debt crisis. Obtaining a broader picture of financial flows at the global level from various perspectives is essential to comprehensively understand the fundamental causes for a series of global-scale financial crises and to formulate effective policy responses in the future. The topics addressed here include a basic concept and overview of global liquidity in a broad sense, domestic and international credit activities of financial institutions in both advanced and emerging countries, and global demand for US dollars. Offshore bond issuance in BRICs countries, including its implications for the Chinese shadow banking sector, uncovered interest rate parity puzzle, and related policies such as capital controls are covered as well. This book is highly recommended to readers who seek an in-depth and up-to-date integrated overview of the dynamics of today’s globalized financial markets.
Author(s): Yoichi Matsubayashi, Shigeto Kitano
Series: Kobe University Monograph Series in Social Science Research
Publisher: Springer
Year: 2022
Language: English
Pages: 239
City: Singapore
Preface
Contents
Editors and Contributors
List of Figures
List of Tables
1 Global Liquidity as a New Trend in International Capital Flows
1.1 Introduction
1.2 The History of International Finance After World War II
1.2.1 International Liquidity
1.2.2 Dollar Liquidity
1.3 The Concept of Global Liquidity
1.3.1 Indicators of Global Liquidity (1)
1.3.2 Indicators of Global Liquidity (2)
1.4 Fluctuation and Control of Global Liquidity
1.4.1 Fluctuation of Global Liquidity
1.4.2 Control of Global Liquidity
1.5 Conclusion
References
2 Destination of Global Liquidity Before the Global Financial Crisis: Role of Foreign Bank Presence and the EU Effect
2.1 Introduction
2.2 Definition and Hypothesis
2.2.1 Patterns of International Capital Flows and Our Definition of “Global Liquidity”
2.2.2 The Period of Global Liquidity Expansion
2.2.3 Hypothesis
2.3 Empirical Methodology and Data
2.3.1 Empirical Model
2.3.2 Data
2.4 Empirical Results
2.4.1 Results with Standard Covariates
2.4.2 Regional Effects
2.4.3 Regulatory Arbitrage
2.5 Robustness Checks
2.6 Conclusions
Appendix
References
3 Global Liquidity and Reallocation of Domestic Credit
3.1 Introduction
3.2 Data and Methodology
3.2.1 Data
3.2.2 Methodology
3.3 Empirical Results
3.3.1 Credit Allocation and Sectoral Destination of Capital Inflows
3.3.2 Credit Allocation, Credit to Households and Sectoral Destination of Capital Inflows
3.3.3 Differences Between Advanced and Emerging Economies and Between Regional Groups
3.4 Conclusion
References
4 Global Financial Crisis and Demand for the US Dollar as an International Currency
4.1 Money Demand Function of the US Dollar as an International Currency
4.2 Important Variables as an International Currency
4.3 Models and Results of Estimation
4.3.1 Estimation Models and Data
4.3.2 Results of Estimation
4.4 Conclusion
References
5 Sovereign Credit Default Swaps and U.S. Economic Policy Uncertainty After the Global Financial Crisis
5.1 Introduction
5.2 An Overview of Sovereign CDS Spreads and the U.S. Financial Markets
5.3 Empirical Analysis
5.3.1 Data
5.3.2 Regression Analysis
5.3.3 Regression Results
5.4 Conclusion
References
6 Global Liquidity and Uncovered Interest Rate Parity Puzzle
6.1 Introduction
6.2 Previous Studies About the UIP Puzzle
6.3 Method and Data
6.4 Empirical Analysis
6.5 Conclusion
References
7 Bank Profitability in Europe Before and After the Global Financial Crisis: Leverage, Foreign Claims, and Monetary Policy
7.1 Introduction
7.2 Data and Stylized Facts
7.2.1 BIS-Consolidated Banking Statistics
7.2.2 Bank-Level Data
7.2.3 Monetary Policy
7.3 Determinants of Bank Profitability
7.4 Econometric Analysis
7.4.1 Model
7.4.2 Results
7.5 Conclusions and Implications
References
8 Offshore Bond Issuance and Noncore Liability in BRICs Countries
8.1 Introduction
8.2 Facts and Data Description
8.3 Shadow Banking and Offshore Bond Issuance in China
8.4 Conclusions
References
9 Recent Developments in the Adoption of Capital Controls in Emerging Economies: Theory and Practice
9.1 Introduction
9.2 Capital Controls in Theory
9.2.1 Capital Controls and Financial Frictions
9.2.2 Capital Controls as a Credit Policy Tool
9.2.3 Capital Controls, Monetary Policy, and the Exchange Rate System
9.2.4 Capital Controls and Macroprudential Regulation
9.3 Capital Controls in Practice
9.3.1 New Capital Control Measures
9.4 Conclusion
Appendix
References
Index
