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Satoshi Tobe
''Local Banking Systems and Sensitivity of Capital Inflows to Global Factors''
( 2017, Vol. 37 No.3 )
This article explores the interaction between capital inflows and global factors. A panel regression analysis covering 39 developed and emerging countries reveals that capital inflows into each country are closely associated with the leverage of the U.S. financial intermediaries, and more importantly, the effects of this leverage on capital inflows are non-linear: they are stronger in economies with larger deviations of the bank credit-to-GDP ratio. The results suggest that economies that are further in the expansionary phase of the financial cycle are more strongly exposed to spillover effects of the U.S. monetary policies because the leverage of the U.S. financial intermediaries is closely tied with federal fund rate shocks.
Keywords: Gross capital inflows, Global factors, Credit cycle
JEL: F3 - International Finance: General
F4 - Macroeconomic Aspects of International Trade and Finance: General
Manuscript Received : Jul 12 2017 Manuscript Accepted : Aug 31 2017

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