IMFblog / News
Keeping the Wheels of Trade in Motion, Sep 26, 2016 (with Aqib Aslam, Emine Boz, Marcos Poplawski-Ribeiro, and Petia Topalova)
Cross-Country Analysis of Housing Finance and Real Estate Booms, Jun 10, 2015 (with Jihad Dagher and Giovanni Dell’Ariccia)
Banking Across Boarders: Are Chinese Banks different? , Feb 24, 2021 (with Catherine Koch and Swapan-Kumar Pradham)
Chinese banks have become the largest cross-border lenders to emerging markets and developing economies (EMDEs). Despite their different ownership structure, their type of global reach resembles that of advanced economies’ (AE) banks, with distance to their borrowing EMDEs less of a barrier than that of other EMDE banks and more like U.S. or European banks. While bilateral trade, FDI, and portfolio investment positively correlate with lending for most banking systems, Chinese banks’ lending to EMDEs also strongly correlates with trade (e.g., in line with patterns exhibited by U.S. banks), but not with FDI and, unlike other banks, it correlates negatively with portfolio investment.
The shifting drivers of covered interest parity deviations, Oct 8, 2020 (with Maurice Obstfeld and Haonan Zhou)
The Covered interest rate parity has been a central principle in international finance, but important departures have persisted since the Global Crisis. This column argues that several macro-financial factors – reflecting risk appetite, monetary policies, and financial regulations – correlate over time with the evolution of covered interest parity deviations. The failure of covered interest rate parity has several policy implications, ranging from the domestic and international transmission of monetary policies to inefficient market allocations.
The increasing faith in macroprudential policies, Sep 18, 2018 (with Stijn Claessens and Luc Laeven)
The Global Crisis was a catalyst for the adoption of macroprudential policies around the world. Using newly updated data, this column examines the adoption of macroprudential policy instruments from 2000 to 2017. Since 2015, advanced economies have on average been using more instruments than emerging economies and low-income countries. While some instruments seem to be effective, it remains to be seen whether this suite of policies can deliver overall financial stability.
The Chinese banking system: Much more than a domestic giant, Feb 9, 2018 (with Haonan Zhou) (>22,000 reads) Also available in Chinese at CEEM 2018
Chinese banks have continued to expand rapidly both domestically and abroad. Together, they constitute the largest banking sector in the world by far. This column places the Chinese banking system in a global context. Although very small relative to their domestic claims, Chinese banks’ foreign claims are substantial for many borrower countries in Asia, Africa, and the Caribbean in particular. Many of these banking connections are related to Chinese outward foreign direct investment, with fewer related to trade linkages.
Global trade: Drivers behind the slowdown, Feb 13, 2017 (with Aqib Aslam, Emine Boz, Marcos Poplawski-Ribeiro, and Petia Topalova) (>21,000 reads)
A growing literature aims to understand the remarkable slowdown in global trade growth in recent years. This column discusses a chapter in the IMF’s October 2016 World Economic Outlook on the drivers of the trade slowdown, and compares the findings to those of other recent studies. It argues that a variety of factors have contributed to weak trade growth, with widespread anemic economic activity and the change in its composition being among the key drivers.
The use and effectiveness of macroprudential policies: New evidence, Feb 10, 2016 (with Stijn Claessens and Luc Laeven) (>14,000 reads)
Macroprudential policies are meant to reduce procyclicality in financial markets and associated systemic risks. However, empirical evidence on which policies are most effective is still preliminary and inconclusive. This column documents the use of macroprudential policies by a large set of countries over an extended period, and covering many instruments. It shows which policies are most effective in reducing the growth rates of overall credit and household and corporate sector credit, and explores differences across countries, degrees of avoidance, and whether policies work better during booms or busts.
Push factors and capital flows to emerging markets: Why knowing your lender matters, Sep 9, 2015 (with Stijn Claessens and Damien Puy) (>14,000 reads)
Recent economic and financial events, such as the ‘taper tantrum’, have highlighted again the relevance of global factors in driving capital flows to emerging markets. This column suggests that capital flows to emerging markets move in part due to global push factors. However, sensitivity to these push factors differs greatly across types of flows and emerging markets. How much push factors affect individual emerging markets depends on their local liquidity and the composition of their foreign investor bases. Countries relying more on international funds and global banks are significantly more affected by changes in push factors.
A primer on ‘global liquidity’, Jun 4, 2014 (with Stijn Claessens and Lev Ratnovski) (>22,000 reads)
‘Global liquidity’ is often used to describe the impact of low US and EZ interest rates on the rest of the world. The concept is critical for understanding the global financial cycle and international spillovers. This column defines global liquidity as the ease of financing in cross-border markets and points to its potential drivers. To limit their exposures to global liquidity fluctuations nations can embrace better macro policy frameworks, consider capital flow management tools, and more stringently regulate and supervise banks.
Ringfencing and consolidated bank stress tests, Apr 13, 2013 (with Christian Schmieder) (>14,000 reads)
The bank ‘stress-test’ is now a crucial crisis-fighting tool. This column discusses research into the shortcomings that arise from ‘ringfencing’, that is, the implicit or explicit regulations that hope to favour domestic markets. Notably, ringfencing could significantly increase some banks’ capital needs.
Systemic risks in global banking: What available data can tell us and what more data are needed?, Dec 17, 2012 (with Stijn Claessens and Patrick McGuire) (>18,000 reads)
The current global crisis highlights how interconnected the financial world has become. This interconnectedness is a challenge for global systemic risks analysis. This column argues that much of the data needed for tracking systemic risk are not available and that, in fact, world decision makers are leading in the dark. Recent initiatives that aim to improve aggregate banking statistics and gather better institution-level data are welcome, but the complexity of the system means that we won’t have the data we need for some time yet.