The Effect of Unconventional Monetary Policy on Cross‐Border Bank Loans: Evidence from an Emerging Market

2019 ◽  
Author(s):  
Koray Alper ◽  
Fatih Altunok ◽  
Tanju Çapacıoğlu ◽  
Steven R. G. Ongena
Keyword(s):  
Monetary Policy ◽  
Emerging Market ◽  
Bank Loans ◽  
Unconventional Monetary Policy ◽  
Cross Border

Spillovers of the United States’ Unconventional Monetary Policy to Emerging Asia

2019 ◽  
pp. 118-145
Author(s):  
Ying Xu ◽  
Hai Anh La
Keyword(s):  
United States ◽  
Monetary Policy ◽  
Bank Lending ◽  
The United States ◽  
Quantitative Easing ◽  
Unconventional Monetary Policy ◽  
Bank Lending Channel ◽  
Lending Channel ◽  
Cross Border ◽  
Syndicated Loan Market

This chapter assesses the spillover effects of the United States’ unconventional monetary policy on the Asian credit market. With a focus on cross-border bank lending, it employs firm-level loan data with regard to the syndicated loan market and measures the international bank lending channel through changes in United States dollar-denominated loans extended to Asian borrowers. It finds that the growth of dollar credit in Asia increased substantially in response to quantitative easing in the US financial market. The results of this study confirm the existence of the bank lending channel in Asia and emphasize the role of credit flows in transmitting financial conditions. The chapter also provides new evidence of cross-border liquidity spillover in the syndicated loan market. It finds that the overall spillover effect was large but differed significantly in Asia by types of borrowing firms, financing purposes, and loan terms at different stages of the quantitative easing programmes.

scholarly journals Spillovers of US unconventional monetary policy: quantitative easing, spreads, and international financial markets

2021 ◽  
Vol 7 (1) ◽  
Author(s):  
Zekeriya Yildirim ◽  
Mehmet Ivrendi
Keyword(s):  
Monetary Policy ◽  
Financial Markets ◽  
Risk Taking ◽  
Large Scale ◽  
Emerging Market ◽  
Spillover Effects ◽  
International Financial Markets ◽  
Quantitative Easing ◽  
Unconventional Monetary Policy ◽  
The Us

AbstractThis study investigates the international spillover effects of US unconventional monetary policy (UMP)—frequently called large-scale asset purchases or quantitative easing (QE)—on advanced and emerging market economies, using structural vector autoregressive models with high-frequency daily data. Blinder (Federal Reserve Bank of St. Louis Rev 92(6): 465–479, 2010) argued that the QE measures primarily aim to reduce US interest rate spreads, such as term and risk premiums. Considering this argument and recent empirical evidence, we use two spreads as indicators of US UMP: the mortgage and term spreads. Based on data from 20 emerging and 20 advanced countries, our empirical findings reveal that US unconventional monetary policies significantly affect financial conditions in emerging and advanced countries by altering the risk-taking behavior of investors. This result suggests that the risk-taking channel plays an important role in transmitting the effects of these policies to the rest of the world. The extent of these effects depends on the type of QE measures. QE measures such as purchases of private sector securities that lower the US mortgage spread exert stronger and more significant spillover effects on international financial markets than those that reduce the US term spread. Furthermore, the estimated financial spillovers vary substantially across countries and between and within the emerging and advanced countries that we examine in this study.

scholarly journals WHAT PROTECT EMERGING MARKETS FROM DEVELOPED COUNTRIES UNCONVENTIONAL MONETARY POLICY SPILLOVER?

2017 ◽  
Vol 19 (4) ◽  
pp. 443-468
Author(s):  
Eko Sumando
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Emerging Markets ◽  
Fixed Effects ◽  
Emerging Market ◽  
Spillover Effect ◽  
Developed Countries ◽  
Unconventional Monetary Policy ◽  
Fixed Effects Model ◽  
Panel Fixed Effects

This paper investigates the macro-characteristics that reduce the spillover effect of unconventional monetary policy (UMP) from developed countries to the emerging market ones. We use event study method to examine 24 UMP announcements and a panel fixed effects model to examine the characteristics of the emerging markets. The spillover channel considered in this paper is the exchange rate. The results show inconclusiveness of the macroeconomic fundamentals role on emerging markets’ currency resilience. From three main fundamental economic indicators, only inflation was found to significantly and positively contribute to exchange rate depreciation. Deeper financial markets contribute to better resilience. Tradelinkages with China provide less vulnerable currency position of the emerging markets while trade linkages with developed countries provide mixed evidence. The macro-prudential policy and the capital flow measures that the emerging markets countries implemented before to the announcements are moderately effective on reducing the spillover effect.

Emerging market capital flows may stabilise in 2016

2016 ◽  
Keyword(s):  
Monetary Policy ◽  
Capital Flows ◽  
Direct Investment ◽  
Emerging Market ◽  
Content Type ◽  
Global Capital ◽  
Cross Border ◽  
The Us ◽  
Global Growth ◽  
Economic Outlook

Subject Outlook for global capital flows. Significance Foreign direct investment (FDI) into emerging markets (EMs) rose slightly in 2015, according to the latest UNCTAD report on capital flows, as the growth of FDI in Asia offset losses in other areas. In the light of this, fears of a collapse in global capital flows in 2016, exacerbated by poor global growth, the commodity sell-off and the risks associated with the US monetary policy tightening, may prove excessive. Impacts The sharp divergence in capital flow trends will continue, punishing energy and commodity producers. India may experience robust FDI increases, illustrating that not all EMs are out of favour. Any improvement in the global economic outlook will translate into stronger cross-border flows.

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