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Global liquidity and impairment of local monetary policy

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dc.contributor.author Fendoğlu, Salih
dc.contributor.author Gülşen, Eda
dc.contributor.author Peydró, José-Luis
dc.date.accessioned 2020-03-03T16:05:24Z
dc.date.available 2020-03-03T16:05:24Z
dc.date.issued 2019-11
dc.identifier.uri http://hdl.handle.net/10230/43776
dc.description.abstract We show that global liquidity limits the effectiveness of local monetary policy on credit markets. The mechanism is via a bank carry trade in international markets when local monetary policy tightens. For identification, we exploit global (VIX, U.S. monetary policy) shocks and loan-level data —the credit and international interbank registers— from a large emerging market, Turkey. Softer global liquidity conditions attenuate the pass-through of local monetary policy tightening on loan rates, especially for banks with more access to international wholesale markets. Effects are also important for other credit margins and for risk-taking, e.g. riskier borrowers in FX loans or defaults.
dc.format.mimetype application/pdf
dc.language.iso eng
dc.subject.other Global financial cycle
dc.subject.other Monetary policy
dc.subject.other Emerging markets
dc.subject.other Banks
dc.subject.other Carry trade
dc.title Global liquidity and impairment of local monetary policy
dc.type info:eu-repo/semantics/workingPaper
dc.rights.accessRights info:eu-repo/semantics/openAccess


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